Garden Supply Company sells only two products, Product G1 and Product G2.
Product G1 
Product G2 
Total 

Selling price 
$36 
$59 

Variable cost per unit 
$28 
$43 

Total fixed costs 
$405,000 
Garden Supply sells 4 units of Product G1 for each 3 units it sells of Product G2. Garden Supply has a tax rate of 20%.
Required:
a. What is the breakeven point in units for each product, assuming the sales mix is 4 units of Product G1 for each 3 units of Product G2?
b. How many units of each product would be sold if Garden Supply desired an aftertax net income of $385,000, using its tax rate of 20%?
a)
Contribution per unit of Product, G1 = 36 28 = $8
Contribution per unit of Product G2 = 59  43 = $16
Sales mix:
4 units of Product G1 for each 3 units of Product G2
Weighted average contribution per unit = [(4*8) + (3*16)] / 7 = $11.43 (Approximately)
Break Even Point = Fixed cost / Weighted average contribution per unit
= 4,05,000 / 11.43
= 35,433 units (Approximately)
Units Break  up:
Product G1 = 35,433 * 4/7 = 20,247 units (Approximately)
Product G2 = 35,433 * 3/7 = 15,186 units (Approximately)
b)
Desired operating profit = 3,85,000/80*100 = $4,81,250
Units to be sold to earn desired profit = (Fixed cost + Desired profit) / Weighted average contribution per unit
= (4,05,000 + 4,81,250) / 11.43
= 77,537 (Approximately)
Units Breakup:
Product G1 = 77,537 * 4/7 = 44,307 units (Approximately)
Product G2 = 77,537 * 3/7 = 33,230 units (Approximately)
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