Mount Carmel Company Sells Only Two Products,Product a and Product

Essay

Mount Carmel Company sells only two products,Product A and Product B.
$$\begin{array} { | l | c | c | c | } \hline & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Selling price } & \$ 40 & \$ 50 & \\\hline \text { Variable cost per unit } & \$ 24 & \$ 40 & \\\hline \text { Total fixed costs } & & & \$ 840,000 \\\hline\end{array}$$ Mount Carmel sells two units of Product A for each unit it sells of Product B.Mount Carmel faces a tax rate of 30%.
Required:
a.What is the breakeven point in units for each product assuming the sales mix is 2 units of Product A for each unit of Product B?
b.What is the breakeven point if Mount Carmel's tax rate is reduced to 25%,assuming the sales mix is 2 units of Product A for each unit of Product B?
c.How many units of each product would be sold if Mount Carmel desired an after-tax net income of $73,500,facing a tax rate of 30%?