Reference no: EM133003500

Biscayne's Rent-A-Ride rents two models of automobiles: the standard and the deluxe. Information follows:

                                            Standard               Deluxe

Rental price per day         $30.00                 $38.00

Variable cost per day       10.50                    15.20

Biscayne's total fixed cost is $18,500 per month.

Required:

Problem 1. Determine the contribution margin per rental day and contribution margin ratio for each model that Biscayne's offers.

Problem 2. Which model would Biscayne's prefer to rent?

Problem 3. Calculate Biscayne's break-even point if the product mix is 50/50.

Problem 4. Calculate the break-even point if Biscayne's product mix changes so that the standard model is rented 75 percent of the time and the deluxe model is rented for only 25 percent.

Problem 5. Calculate the break-even point if Biscayne's product mix changes so that the standard model is rented 25 percent of the time and the deluxe model is rented for 75 percent.