Explorer company Limited, a digital company, manufactures and sells three products

Explorer company Limited, a digital company, manufactures and sells three products, Tatum, Satum and Qatum. The company maintains consistently a policy of 80% variable cost ratio for each product. The selling price per unit for Tatum, Satum and Qatum are $100, $125 and $150 respectively. The company intends to sell 5,000 Tatum, 4,000 Satum and 3,000 qatum for the period. The total fixed cost for the period is $580,000.

a. Calculate the break even total combined units.

b. Calculate the total combined units to be sold to achieve a target profit of $870,000.

c. Calculate the total combined units to be sold to achieve a target profit of $1,305,000 after tax (tax rate is 25%)

Here’s the SOLUTION

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