Letter Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 50,000 units of each product. Sales and costs for each product follow.
Product T Product O
Sales…………………………………………. $800,000 $800,000
Variable costs………………………………... 560,000 100,000
Contribution margin…………………………. 240,000 700,000
Fixed costs…………………………………… 100,000 560,000
Income before taxes…………………………. 140,000 140,000
Income taxes (32% rate)…………………….. 44,800 44,800
Net income…………………………………... $ 95,200 $ 95,200
1. Compute the break-even point in dollar sales for each product.