A firm sells two different products, A and B. 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:
$$\begin{array} { l | l | l }
\hline \begin{array} { l }\text { Product} \end{array}& \begin{array} { l }
\text { Selling } \
\text { Price per unit }
\end{array} & \begin{array} { l }
\text { Variable } \
\text { Costs per } \
\text { unit }
\end{array} \
\hline \text { A } \ldots \ldots & \$ 72 & \$ 40 \
\hline \text { B } \ldots \ldots & 48 & 28
\end{array}$$ 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 and B. 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:
 $$\begin{array} { l | l | l } 
\hline  \begin{array} { l }\text { Product} \end{array}& \begin{array} { l } 
\text { Selling } \
\text { Price per unit }
\end{array} & \begin{array} { l } 
\text { Variable } \
\text { Costs per } \
\text { unit }
\end{array} \
\hline \text { A } \ldots \ldots & \$ 72 & \$ 40 \
\hline \text { B } \ldots \ldots & 48 & 28
\end{array}$$ 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 and B. 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:
 $$\begin{array} { l | l | l } 
\hline  \begin{array} { l }\text { Product} \end{array}& \begin{array} { l } 
\text { Selling } \
\text { Price per unit }
\end{array} & \begin{array} { l } 
\text { Variable } \
\text { Costs per } \
\text { unit }
\end{array} \
\hline \text { A } \ldots \ldots & \$ 72 & \$ 40 \
\hline \text { B } \ldots \ldots & 48 & 28
\end{array}$$ 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 and B Required: (A) Calculate the Contribution Margin Per Composite Unit

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