Managerial Accounting

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Sales Volumes with After-Tax Profits


Chester Industries sells three product lines. Data are as follows:

Product Selling Variable
Line Price Cost
----- ------- -------
X \$25 \$20
Y \$40 \$25
Z \$20 \$10

It is estimated that 30% of total sales volume will be for Product X, 30% for Product Y, and 40% for Product Z. Fixed costs for the year are expected to be \$200,000. The budgeted after-tax profit is \$300,000 and the income tax rate is 40%.

How many units of each product line must be sold to earn the budgeted after-tax profit?