Question

1. Jack Co sells two products, J and D. Product J is sold for $25 per unit and has a variable cost per unit of $15. Product D is sold for $30 per unit and has a unit variable cost of $20. Total fixed costs for the company are $20,000. Jack Co typically sells three units of Product J for every unit of Product D.
   1. What is the breakeven point in total units and by product?
   2. What quantity and by product will generate a target operating income of $20,000?
   3. What quantity and by product will generate an after tax net income of $20,000. Assume a tax rate of 30%.

Answer 1

Product I 25 Product D 30 20 Selling price (sp) Variable cost cu...) Contribution per (CP4) unit weight 3 Group Contribution = cpuCXW (J) + CPU(D) X WCD) W(T) + WCB) per unit 10x3 + Lox1 3 +1 40 = lopu. Breakever point a . Cunits) Fited cost Group Contribution per unit. pogos 2000 unit units of product = 2000 x 3 o [3713 = 1500 unit

units of Product D = 2000x I [3+1] = 500 unit Tunits to be sold to = Fixed + Desired econ desired Income cost Income Group contribution - Perlinit = 20000+20000 - yooo units Li- од гол! Тя Чооѕ4 3 [ 31] Зоор і units of Product D= 4ooox I (3+) = 1000 unit

c) Profitafter Tax = $20000 тах Гросъ -3°1 - тоѕt \ Profit before Tax a $28571 unit to be sold to - fited cast + Desired cars desired profit profit group contribution peren't a 20000 t 28571 $10 2 4857 units Capprox) I runits of Product = 4857x 3 C3+3 - 3642.75 unit units of Product D=4857 X 1 [3+) 2 1214-25