A firm sells two different products, A and B. For each unit of B sold, the firm sells two units of A. Total fixed costs $1,260,000. Additional selling prices and cost information for both products follow:

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 sold, the firm sells two units of A. Total fixed costs $1,260,000. Additional selling prices and cost information for both products follow:

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 sold, the firm sells two units of A. Total fixed costs $1,260,000. Additional selling prices and cost information for both products follow:

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