P1. (CVP) Rowling Company produces and sells three products, product A, product B, and product C....
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P1. (CVP) Rowling Company produces and sells three products, product A, product B, and product C. Over the most recent five years, Rowling sold 10,000 units of A, 40,000 units of B, and 50,000 units of C annually each year. The following information pertains to the prices and costs of the three products. A B C Price($)/unit 10 13 16 Variable costs ($)/unit -7 -10 - 11 Contribution margin/unit 3 3 5 Fixed costs: $440,000 per year Target income after tax of 40%: $120,000 per year Instructions: Assume that the sales mix is maintained. a. What is the company's break-even point in terms of the number of units of each product given the sales mix above? b. How many units of each product should be sold to earn the target income? c. If investment costs were $300,000 to open the company & the company would continue to earn the target income every year and retain 50% of net income to recover the initial investment costs, how many years will it take to fully recover the investment costs? P1. (CVP) Rowling Company produces and sells three products, product A, product B, and product C. Over the most recent five years, Rowling sold 10,000 units of A, 40,000 units of B, and 50,000 units of C annually each year. The following information pertains to the prices and costs of the three products. A B C Price($)/unit 10 13 16 Variable costs ($)/unit -7 -10 - 11 Contribution margin/unit 3 3 5 Fixed costs: $440,000 per year Target income after tax of 40%: $120,000 per year Instructions: Assume that the sales mix is maintained. a. What is the company's break-even point in terms of the number of units of each product given the sales mix above? b. How many units of each product should be sold to earn the target income? c. If investment costs were $300,000 to open the company & the company would continue to earn the target income every year and retain 50% of net income to recover the initial investment costs, how many years will it take to fully recover the investment costs?
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