Question
Amazon Inc. sells only 2 products, X and Y. She sells 3 units of product X for each 2 units of product Y. Amazons tax
Amazon Inc. sells only 2 products, X and Y. She sells 3 units of product X for each 2 units of product Y. Amazons tax rate is 25%. Additional information for Amazon is as follows:
Product X Product Y Total
Selling price $50 $90
Variable cost per unit $40 $70
Total fixed costs $700,000
Required:
1) Calculate the breakeven point in units and sales dollars for each product. (8 points)
2) Calculate the number of units that would have to be sold to make an after-tax income of $210,000, assuming Amazons tax rate is 25%. (5 points)
3) The manager of product X has the opportunity to sell an additional 10,000 units as a one-time special order. Variable costs per unit will increase to $46 and an additional delivery run will be made at a cost of $10,000. Should Amazon make this sale? (5 points)
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