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December 20, 2014

December 20, 2014

Posted by **Amy** on Tuesday, February 5, 2008 at 8:26am.

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.

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