A Company produces and sells 3 products, product A, product B, and product C. Over the most recent 5 years, Rowling sold 10,000 units of A, 50,000 units of B, and 40,000 units of C annually each year. The following information pertains to the prices and costs of the three products.

A B C

Price($)/unit 15 12 10

Variable costs ($)/unit -9 -8 - 5

Contribution margin/unit 6 4 5

Fixed costs: $500,000

Target income after tax of 40%: $1,000,000

Instructions: Assume that the sales mix is maintained.

1. What is the company's break-even point in terms of the number of units of each product given the sales mix above?

2. How many units of each product should be sold to earn the target income?

3. If investment costs were $2,400,000 to open the company & the company decided to retain 40% of net income to recover the initial investment costs, how many units of each product should be sold to recover the investment costs fully? Presume that Rowling will earn the target income every year.