Cost-Volume-Profit Analysis. Curry Company produces and sells two distinct products, B2 and B4. Available data for the year ending December 31, 20A, follow:
B2 B4
Sales volume ................................................ 20,000 40,000
Selling price per unit ....................................... $180 $160
Direct materials ............................................. $ 65 $ 40
Direct labor .................................................. 40 40
Variable factory overhead ................................. 16 16
Fixed factory overhead .................................... 25 25
Full cost per unit ........................................... $146 $121
Gross profit per unit ....................................... $ 34 $ 39
Other information pertaining to operations during the year ending December 31, 20A, follow.
(a) Variable selling costs were 5% of sales.
(b) Fixed selling and administrative costs were $207,330 (with a capacity to handle volumes of up to twice those of 20A).
(c) The present plant facilities provide a capacity of 60,000 units; this can be increased to a capacity of 100,000 units at an additional cost of $80,000.
(d) The company is taxed at a rate of 40%.
Expected changes for the year ending December 31, 20B, include the following:
(a) The selling price of B4 is expected to increase by 10%, but no other changes are expected in costs or selling prices for either product.
(b) The sales mix of 20B is expected to be in the ratio of 2 units of B2 to 3 units of B4.
Required:
Calculate the number of units of each product the company must sell to earn an aftertax net income of $135,000 for the year ending December 31, 20B.