Wang Co.manufactures and sells a single product that sells for $450 per unit; variable costs are $270 per unit.Annual fixed costs are $800,000.Current sales volume is $4,200,000.Management targets an annual pre-tax income of $1,125,000.
-Compute the unit sales to earn the target pre-tax net income.
A)4,444.
B)7,500.
C)6,650.
D)10,694.
E)11,750.

Question

Quizplus · Accepted Answer

To find the unit sales needed to earn the target pre-tax income, use the formula: (Fixed Costs + Target Income) / (Selling Price per Unit - Variable Cost per Unit). Here, it is ($800,000 + $1,125,000) / ($450 - $270) = 10,694 units.

Wang CoManufactures and Sells a Single Product That Sells for $450