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.