A firm sells two different products, A andB. For each unit of B, the firm sells two units of A. Total fixed costs for this firm are $1,260,000. Additional selling prices and cost information for both products follow: $\begin{array}{rrr}
& \text { Selling } & \text { Variable } \
\text { Product } & \text { Price per unit } & \text { Costs per unit}\
\mathrm{A} & \$ 72 & \$ 40 \
\mathrm{~B} & 48 & 28
\end{array}$
Required:
(a) Calculate the contribution margin per composite unit.
(b) Calculate the break-even point in units of each individual product.
(c) If pretax income before taxes of $294,000 is desired, how many units of A and B must be sold?

Question

A firm sells two different products, A andB. For each unit of B, the firm sells two units of A. Total fixed costs for this firm are $1,260,000. Additional selling prices and cost information for both products follow: $\begin{array}{rrr}
& \text { Selling } & \text { Variable } \
\text { Product } & \text { Price per unit } & \text { Costs per unit}\
\mathrm{A} & \$ 72 & \$ 40 \
\mathrm{~B} & 48 & 28
\end{array}$ 
Required:
(a) Calculate the contribution margin per composite unit.
(b) Calculate the break-even point in units of each individual product.
(c) If pretax income before taxes of $294,000 is desired, how many units of A and B must be sold?

Quizplus · Accepted Answer

The Answer of A firm sells two different products, A andB. For each unit of B, the firm sells two units of A. Total fixed costs for this firm are $1,260,000. Additional selling prices and cost information for both products follow: $\begin{array}{rrr}
& \text { Selling } & \text { Variable } \
\text { Product } & \text { Price per unit } & \text { Costs per unit}\
\mathrm{A} & \$ 72 & \$ 40 \
\mathrm{~B} & 48 & 28
\end{array}$ 
Required:
(a) Calculate the contribution margin per composite unit.
(b) Calculate the break-even point in units of each individual product.
(c) If pretax income before taxes of $294,000 is desired, how many units of A and B must be sold?

A Firm Sells Two Different Products, a AndB Required: (A) Calculate the Contribution Margin Per Composite Unit

A Firm Sells Two Different Products, a AndB Required:
(A) Calculate the Contribution Margin Per Composite Unit