Thompson company produces scientific and business calculator, Thompson expects to sell 200,000 scientific calculators and 100,000 business calculators. A segmented income statement for the two products is given below:
Scientific Business Total
Sale $5,000,000 $2,000,000 $7,000,000
Less: Variable cost (2,400,000) (900,000) (3,300,000)
Contribution Margin $2,600,000 $1,100,000 $3,700,000
Less: Direct fixed costs (1,200,000) (960,000) (2,160,000)
segment margin $1,400,000 $140,000 $1,540,000
less: common fixed costs (800,000)
operating income $740,000
Required
a.Compute the number of scientific calculators and the number of business calculators that must be sold to breakeven.
b.Compute the number of scientific calculators and the number of business calculators that must be sold to achieve a $444,000 after tax income. Assume a 40% tax rate.