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A product sells for $210 per unit, and its variable costs per unit are $130. The fixed costs are $420,000. If the firm wants to earn $35,000 after tax income (assume a 30% tax rate), how many units must be sold

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Zviko

Answer:

5,688 units

Explanation:

Target sales = Target Profit + Fixed Costs ÷ Contribution per unit

where,

Contribution per unit = Sales - Variable Costs

                                   = $210 - $130 = $80

therefore,

Target sales = ($35,000 + $420,000)  ÷  $80 = 5,688 units

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