$7-3$A $$ Multi$-$product CVP

Awesome Axes sells electric guitars. The company sells three models of guitar: Enthusiast, Jammer and Pro.

Information relating to next year$$s budget for the three models follows:

Expected sales $($units$)$ Sales price

Variable cost

Enthusiast Jammer Pro $60035050$ $$200$ $$500$ $$3,000$ $$120$ $$200$ $$800$

The company has annual fixed costs of $$200,000$ and a tax rate of $25\%.$

Required:

a$.)$ Compute the company$$s expected profit $($net income$)$ for the upcoming fiscal period.

b$.)$ Compute the company$$s sales mix.

c$.)$ Assuming a consistent sales mix, how many units of each product type must the company

sell to break even?

d$.)$ Assuming a consistent sales mix, if the company wishes to earn net income of $$300,000,$

how many units of each product type must be sold?

e$.)$ Compute the margin of safety in both dollar and percentage terms.