Harvey Cricket Bats Company sells two types of bat,Superdrive and Excalibre.
$$\begin{array} { | l | c | c | c | }
\hline & \text { Superdrive } & \text { Excalibre } & \text { Total } \
\hline \text { Selling price } & \$ 40 & \$ 50 & \
\hline \text { Variable cost per unit } & \$ 24 & \$ 40 & \
\hline \text { Total fixed costs } & & & \$ 840000 \
\hline
\end{array}$$
Harvey Cricket Bats sells two units of Superdrive for each unit it sells of Excalibre.If Harvey Cricket Bats has a tax rate of 30% and desires a net after-tax profit of $73 500,the break-even point in units would be:

Question

Harvey Cricket Bats Company sells two types of bat,Superdrive and Excalibre.
$$\begin{array} { | l | c | c | c | } 
\hline & \text { Superdrive } & \text { Excalibre } & \text { Total } \
\hline \text { Selling price } & \$ 40 & \$ 50 & \
\hline \text { Variable cost per unit } & \$ 24 & \$ 40 & \
\hline \text { Total fixed costs } & & & \$ 840000 \
\hline
\end{array}$$
Harvey Cricket Bats sells two units of Superdrive for each unit it sells of Excalibre.If Harvey Cricket Bats has a tax rate of 30% and desires a net after-tax profit of $73 500,the break-even point in units would be:

Quizplus · Accepted Answer

To find the break-even point in units, we first need to calculate the desired profit before tax, considering the tax rate of 30%. The desired net after-tax profit is $73,500, so the profit before tax is $73,500 / (1 - 0.30) = $105,000. The total profit needed is the sum of the desired profit before tax and the total fixed costs, which is $105,000 + $840,000 = $945,000.The contribution margin per unit for Superdrive is $40 - $24 = $16, and for Excalibre, it's $50 - $40 = $10. Since Harvey sells two Superdrive bats for every Excalibre bat, we can set up the equation to find the number of Excalibre bats needed to break even:$$2 \times 16X + 10X = 945,000$$$$32X + 10X = 945,000$$$$42X = 945,000$$$$X = 22,500$$Therefore, Harvey needs to sell 22,500 units of Excalibre. Since it sells two Superdrive bats for every Excalibre bat, it needs to sell 2 * 22,500 = 45,000 units of Superdrive.

Harvey Cricket Bats Company Sells Two Types of Bat,Superdrive and Excalibre