4.20 Hewtex Electronics manufactures and markets two products-tape recorders and electronic calculators. The projected income statement for both products is given below. h11 Total (000) $4,200.00 HEWTEX ELECTRONICS Projected Income Statement For the Year Ended December 31, 19A Tape Electronic Recorders Calculators Total Total (000) Per Unit (000) Per Unit Sales $1,050 $15.00 $3,150 $22.50 Production Costs: Materials $ 280 $ 4.00 $ 630 $ 4.50 Direct Labor 2.00 420 3.00 Variable Overhead 140 2.00 280 2.00 Fixed Overhead 70 210 1.50 Total $ 630 $ 9.00 $1,540 $11.00 Gross Margin $ 420 $ 6.00 $1,610 $11.50 Fixed Selling and Administrative Net Income before Income Taxes Income Taxes (55%) Net Income 140 1.00 $ 910.00 560.00 420.00 280.00 $2,170.00 $2,030.00 1,040.00 $ 990.00 544.50 $ 445.50 The tape recorder business has been fairly stable the last few years, and the company does not intend to change the tape recorder price. However, due to increased competition, management has decided to reduce the wholesale price of its calculators from $22.50 to $20.00 per unit effective January 1, 19B. At the same time the company plans to spend an additional $57,000 on advertising during fiscal year 19B. As a consequence of these actions, management estimates that 80 percent of its total revenue will be derived from calculator sales as compared to 75 percent of total revenue in 19A. As in prior years, the sales mix is assumed to be the same at all volume levels The total fixed overhead costs will not change in 19B, nor will the variable overhead cost rates (applied on a direct labor hour basis). However, the cost of materials and direct laboris expected to change. The cost of solid-state electronic components will be cheaper in 19B. Hewtex estimates that material costs will drop 10 percent for the tape recorders and 20 percent for the calculators in 19B. However, direct labor costs for both products will increase 10 percent in the coming year. Compute (a) the break-even sales in units for tape recorders and electronic calculators, using 19A data: (b) sales dollars required to earn an after-tax income of 9 percent on sales, using 19B estimates; and (c) the break-even sales in units for tape recorders and electronic calculators, using 19B estimates