The ESP Company produces two types of t-shirts, front design and wraparound design. For convenience

The ESP Company produces two types of t-shirts, front design and wraparound design. For convenience we will call them products A and B. The company's wholesale prices and relevant costs appear below: $4.00 Product Sales Price Direct material Direct labor Variable overhead Manufacturing margin Variable Selling & Adm. costs Contribution margin $2.00 0.5 0.1 0.4 0.2 0.8 0.6 0.4 Total Fixed Costs: Manufacturing $34,000 Selling & Adm. 10,000 The budgeted sales mix in units is 80% product B and 20% product A. Required: a. Find the break-even point in units of A and B based on the budgeted sales mix. b. Assume a tax rate of 40%. What is the maximum return on sales dollars the firm could earn assuming no capacity or demand constraints? c. How many units of A and B would the firm need to produce and sell to earn budgeted net income of $79,200 after taxes? d. How many units of A and B would the firm need to produce and sell to earn an 11% budgeted return on sales dollars after taxes.

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