How many small-size products must the shop sell

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Q1. Laurie's shop is selling products of three sizes: small, medium, and large. The sale mix is 5:3:2. Small-size products are sold at $10 per unit and cost $4 per unit; medium-size products are sold at $4 per unit and cost $1 per unit; and large-size products are sold at $3.50 per unit and cost $2 per unit. The shop's fixed costs are $326,000 every year, and the income tax rate, t, is 20%. How many small-size products must the shop sell at the breakeven point?

Q2. Kathy Inc. has the following cost information: Variable costs are $5 per unit, and total fixed costs for the year are $60,000. The unit selling price is $7.

If the income tax rate is 50%, how many units should Kathy Co. sell to make an after-tax profit (πA) of $22,000?

Q3. Johnson is considering a machine that costs $432,000 and would reduce the amount of time needed to load the waste. Loading the waste by hand into a truck costs labor of $40 per load. The machine would reduce labor cost to $5 per load. Assume that the average loads per year are 10,800. How many years would it take to recover the cost of the new machine?

Reference no: EM132733132

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