What is the breakeven point if tax reduced

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Reference no: EM13149875

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%?

Reference no: EM13149875

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