Question:
Green Rider makes three types of electric scooters. The company's total fixed cost is $1,080,000,000. Selling prices, variable cost, and sales percentages for each type of scooter follow:
Selling Price Variable Cost
Percent of
Total Unit Sales
Mod $2,200 $1,900 30
Rad 3,700 3,000 50
X-treme 6,000 5,000 20
a. What is Green Rider's break-even point in units and sales dollars?
b. If the company has an after-tax income goal of $1 billion and the tax rate is 50 percent, how many units of each type of scooter must be sold for the goal to be reached at the current sales mix?
c. Assume the sales mix shifts to 50 percent Mod, 40 percent Rad, and 10 percent X-treme. How does this change affect your answer to (a)?
d. If Green Rider sold more X-treme scooters and fewer Mod scooters, how would your answers to (a) and (b) change? No calculations are needed.