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Letterman Company produces and sells two products: A and B in the ratio of 3A to 5B. Selling prices for A and B are, respectively, $1,200 and $240; respective variable costs are $480 and $160. The company's fixed costs are $1,800,000 per year.

Compute the volume of sales in units of each product needed to:

Required:

a. break even.

b. earn $800,000 of income before income taxes.

c. earn $800,000 of income after income taxes, assuming a 30 percent tax rate.

d. earn 12 percent on sales revenue in before-tax income.

e. earn 12 percent on sales revenue in after-tax income, assuming a 30 percent tax rate.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M939399

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