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Dawn's Divewear Company Sells Only Two Products,Product a and Product

Question 187

Essay

Dawn's Divewear Company sells only two products,Product A and Product B.
 Product A  Product B  Total  Selling price $40$50 Variable cost per unit $24$40 Total fixed costs $840000\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 } & & & \$ 840000 \\\hline\end{array}
Dawn's Divewear sells two units of Product A for each unit it sells of Product B.Dawn's Divewear faces a tax rate of 30%.
Required:
a.What is the break-even 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 break-even point if Dawn's Divewear'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 Dawn's Divewear desired an after-tax net profit of $73 500,facing a tax rate of 30%?
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Correct Answer:

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a.N = break-even in product B 2N = break...

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