A manufacturing Company produces 2 products – A and B.

Question

The following information is presented for both products:

A
B

Selling Price per unit
$18
$12

Variable Cost per unit
$14
$6

Total Fixed Costs are $468,000.

Compute:

The contribution margin for each product.
Break-even point in units of both A and B if the sales mix is 3 units of A for every unit of B.
Break-even volume in total dollars if the sales mix is 2 units of A for every 3 units of B.
Question 2
Davis Manufacturing gathered the following information:

Variable Costs $630,000
Income Tax Rate 40%
Contribution Margin Ratio 30%

Required:

Compute total fixed costs assuming a break-even volume in dollars of $900,000.
Compute sales volume in dollars to produce an after-tax net income of $72,000.