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

question 57

Essay

A firm sells two different products, A andB. 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: $\begin{array}{rrr}& \text { Selling } & \text { Variable } \\\text { Product } & \text { Price per unit } & \text { Costs per unit}\\\mathrm{A} & \$ 72 & \$ 40 \\\mathrm{~B} & 48 & 28\end{array}$
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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Definitions:

Effaced

Effaced, in obstetrics, refers to the thinning and shortening of the cervix in preparation for childbirth.

Crowned

To be appointed or recognized in a ceremonial or symbolic position of authority, often used in the context of royalty or achievement.

Birth Canal

The passage comprising the cervix, vagina, and vulva through which a fetus passes during childbirth.

Uterus

A major female reproductive organ in many mammals, including humans, that hosts and nourishes the fertilized egg during pregnancy.