Barclay Enterprises manufactures and sells three distinct styles of bicycles: the Youth model sells for $300 and has a unit contribution margin of $105; the Adult model sells for $850 and has a unit contribution margin of $450; and the Recreational model sells for $1,000 and has a unit contribution margin of $500. The company's sales mix includes: 5 Youth models; 9 Adult models; and 6 Recreational models. If the firm's annual fixed costs total $6,500,000, calculate the firm's selling price per composite unit.
A) $1,255.
B) $15,150.
C) $7,575.
D) $1,950.
E) $13,200.

Question

Quizplus · Accepted Answer

The selling price per composite unit is calculated by multiplying the selling price of each model by its proportion in the sales mix and summing them up: (5 * $300) + (9 * $850) + (6 * $1,000) = $15,150.

Barclay Enterprises Manufactures and Sells Three Distinct Styles of Bicycles