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Mount Carmel Company sells only two products, Product A and Product B. Product A Product B $40 $50 $24 $40 Total Selling price Variable cost

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Mount Carmel Company sells only two products, Product A and Product B. Product A Product B $40 $50 $24 $40 Total Selling price Variable cost per unit 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: 1. How many units of each product the company has to sell to breakeven assuming the sales mix of 1:2 for Product A and Product B respectively? 2. There are rumors that the tax rate would be reduced to 23%. Carry out a sensitivity analysis and comment the impact of this change on your answer to part a and its implication on the company. 3. If the management's target is to achieve a net income of $75,300, how many units of each product the company has to sell assuming a tax rate of 30%? 4. Explain why would you care to take into account the taxes in your decision making process

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