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Scenario 2: Mount Carmel Company sells only two products, Product A and Product B. Product A Product B Total Selling price $40 $50 Variable
Scenario 2: Mount Carmel Company sells only two products, Product A and Product B. Product A Product B Total Selling price $40 $50 Variable cost per unit $24 $40 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: a. What is the breakeven point in units for each product assuming the sales mix is 2 units of Product A for each unit of Product B? b. What is the breakeven point if Mount Carmel's tax rate is reduced to 25%, assuming the sales mix is 2 units of Product A for each unit of Product B? c. How many units of each product would be sold if Mount Carmel desired an after-tax net income of $73,500, facing a tax rate of 30%? d. Create a report for management of Mount Carmel explaining your results.
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