1. Mount Carmel 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 Carmel sells two units of Product A for each unit it sells of Product B. Mount Carmel 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? Hint, compute the weighted average Cm per a unit then use the normal formula to compute the total combined BE unit. Separate the combined BE units into A's and B' using the 2:1 ratio i.e. 66.7% and 33.3%

b.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%?