WileyPlus Problem 3-5 The Zager Company produces two types of food processors. I

Question

WileyPlus Problem 3-5 The Zager Company produces two types of food processors. Information about the two products for 2012 is as follows: Selling price per unit Variable costs per unit $78 47 531 $110 53 557 Contribution margin per unit The company expects fixed costs to be 158,000 in 2012. The firm expects 60% of its sales (in units) to be Regular model food processors. Vour answer has been saved and sent for grading, See Gradebook for score details. Determine the break-even p Break-even point oint in units 3816 units Your answer has been saved and sent for grading. See Gradebook for score details. Determine sales in units of Regular and Deluxe models necessary to generate a before-tax profit of $94,000 Sales in units Regular 365 Deluxe 243 Determine sales in units of Regular and Deluxe models necessary to generate an after-tax profit of $94,000 if the tax rate is 46 percent. Regular Deluxe

Explanation / Answer

a. Break Even Point = 158000/(31*60%+57*40%)

= 3816 units.

b. Sales in units of regular and deluxe models in order to earn pretax profit of $94000.

Let total number units be x.

0.60x*31 + 0.40x*57 - 158000 = 94000

x = 6087 units.

c.  Sales in units of regular and deluxe models in order to earn after tax profit of $94000. tax rate is 46%

  Let total number units be x.

(0.60x*31 + 0.40x*57 - 158000) * 54% = 94000

x = 8021 units

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