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Question
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:
| Selling | Variable | |
| Product | Price per Unit | Costs per Unit |
| A | $72 | $40 |
| B | 48 | 28 |
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?
Answer
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