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Question - Abraham Products produces two types of Tennis Bats. One model is (Federer) and the other one is Djokovic. Federer is sold for $280 and has variable costs of $100. Djokovic sells for $300 and has variable costs of $200. The Company sells four times more Federer models compared to Djokovic models. Fixed costs equal $820,000.
Required -
A. What is the breakeven point in unit sales and dollars for each type of Bats at the current sales mix?
B. What is the breakeven point in unit sales and dollars for each type of Bat at the current sales mix if the tax rate is 40%?
C. The Accountant is considering buying new production equipment. The new equipment will increase fixed cost by twice and will decrease the variable cost by 50%. Assuming the same sales mix, how many of each type of bat does Nadal need to sell to break even?
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