A Firm Sells Two Different Products, a and B Required:
(A) Calculate the Contribution Margin Per Composite Unit

question 100

Essay

A firm sells two different products, A and B. For each unit of B, the firm sells two units of A. Total fixed costs for this firm are $1,260,000. Additional selling prices and cost information for both products follow:
$$\begin{array} { l | l | l } \hline \begin{array} { l }\text { Product} \end{array}& \begin{array} { l } \text { Selling } \\\text { Price per unit }\end{array} & \begin{array} { l } \text { Variable } \\\text { Costs per } \\\text { unit }\end{array} \\\hline \text { A } \ldots \ldots & \$ 72 & \$ 40 \\\hline \text { B } \ldots \ldots & 48 & 28\end{array}$$ Required:
(a) Calculate the contribution margin per composite unit.
(b) Calculate the break-even point in units of each individual product.
(c) If pretax income before taxes of $294,000 is desired, how many units of A and B must be sold?

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