5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $19,000 and at that price, Thad estimates 500 units would be sold each year. The variable cost to produce and sell the cycles would be $15,200 per unit. The annual fixed cost would be $1,520,000. a What is the break e ven in unit caloc?
5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $19,000 and at that price, Thad estimates 500 units would be sold each year. The variable cost to produce and sell the cycles would be $15,200 per unit. The annual fixed cost would be $1,520,000. a What is the break e ven in unit caloc?
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5. Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that
was popular in the 1930s. The retro-look cycle would be sold for $19,000 and at that price, Thad estimates 500 units would be sold
each year. The variable cost to produce and sell the cycles would be $15,200 per unit. The annual fixed cost would be $1,520,000.
pok
a. What is the break-even in unit sales?
nt
nces
Break-even in unit sales
b. What is the margin of safety in dollars?
Margin of safety in dollars
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Expert Solution
Step 1
Given sale units = 500
Sale price = $19,000 per unit
Variable cost = $15,200 per unit
Contribution margin = Sales - Variable cost = $3,800 per unit
Total contribution = 3,800 × 500 units = $1,900,000
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