1) Mount Carmel Company operates out of a facility located in Sault Ste. Marie, Ontario. The 10-year-old 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			$840,000

Product A is a more popular item with the customers. Mount Carmel sells two units of Product A for each unit it sells of Product B. The company faces a tax rate of 30%.

Complete the following:

a. What is the breakeven 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 breakeven point if Mount Carmel'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 Mount Carmel desired an after-tax net income of $73,500, facing a tax rate of 30%?

Answer rating: 100% (QA)

To find the breakeven point in units for each product and the total breakeven point we can use the following formula Breakeven Point in units Total Fi... View the full answer