3-60. Extensions of the CVP Basic ModelMultiple Products and Taxes

(LO 3-4)

Assume that Ocean King Products sells three varieties of canned seafood with the following prices and costs:

	Selling Price per Case	Variable Cost per Case	Fixed Cost per Month
Variety 1	$ 3	$2
Variety 2	5	3
Variety 3	10	6
Entire firm			$46,200

The sales mix (in cases) is 40 percent Variety 1, 35 percent Variety 2, and 25 percent Variety 3.

Required Please Show Work

1. At what sales revenue per month does the company break even?

   1. Suppose the company is subject to a 35 percent tax rate on income. At what sales revenue per month will the company earn $40,950 after taxes assuming the same sales mix?

      After tax net income	1 minus tax rate	Before tax net income
      ?	?	?

   2. Fixed cost + net income	Weighted average CM	Breakeven Revenue
      ?	?	?