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Determine the contribution margin for each electric guitar

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Reference no: EM133535540

Question: Assume that a music store sells three types of electric guitars: Telecaster, Stratocaster, and Jazzmaster. The music store has monthly fixed costs of $222,500 and sells 2 Telecasters for every Stratocaster, and 4 Stratocasters for every Jazzmaster. The product information is presented below:

      Telecaster Stratocaster Jazzmaster  
Unit Selling Price                   1,100                1,200                1,525   
Unit Variable Cost                     (725)                 (815)             (1,275)  

 
Required

1. Determine the contribution margin for each electric guitar.

2. Determine the average contribution margin for the sales mix.

3. Determine the number of Stratocasters sold at the monthly break-even point.

 

Reference no: EM133535540

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