Question

I need a step by step answer to the following accounting problem.

ACC 512 Multiproduct CVP Analysis with income taxes Case

Jan Green is preparing a business plan to present to her local bank. She provides with the following selected information from her business Hightway 37 Stores:
Products				A	B	C	D
Selling price per unit				$20.00	$50.00	$28.00	$10.00
Units sold				1,000	500	1,500	2,000
Variable cost per unit				$10.00	$25.00	$14.00	$5.00
Total fixed costs				$1,605.00
Combined federal and state income tax rate				40%
Desired net income				$2,568.00
Compute the number of units of products A, B, C, and D required to earned the desired after tax profit. Products can only be sold in whole units, therefore round your answers to the nearest whole unit.

Answer 1

Desired Profit after tax	2568
Tax Rate	40%
Desired Profit Before tax	4280	(2568/(1-40%)
Fixed Cost	1605
Total Required Contribution Margin	5885
Contribution Margin ratio	50%
Sales Level	11770
Ranking of Product basis CM Ratio:
Products	A	B	C	D
Selling Price	20	50	28	10
Less: VC	10	25	14	5
Contribution Margin	10	25	14	5
Contribution Margin ratio	50%	50%	50%	50%
Company can sell any product first
Units	1000	500	1500	2000
	Sales Value	Explanation	Units
Take Product A	10000	(1000*10)	1000
Take Product B	1770	(11770-10000)/25	71	70.8 Rounded off
Product C	-	No Need taget already Acieved	-
Product D	-	No Need taget already Acieved	-
Total Sales Level	11770