Mount Horse 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

 

Mount Horse sells two units of Product A for each unit it sells of Product B. Mount Horse faces a tax rate of 30%.

 

Required:

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 Horse'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 Horse desired an after-tax net income of $73,500, facing a tax rate of 30%?

Answer rating: 100% (QA)

SOLUTION a Breakeven point assuming sales mix of 2A1B Total units sold Units of A Units of B ... View the full answer