A product sells for $200 per unit, and its variable costs per unit are $130. The fixed costs are $420,000. If the firm wants to earn $35,000 pretax income, how many units must be sold?
A) 6,500.
B) 6,000.
C) 500.
D) 5,000.
E) 5,500.

Question

Quizplus · Accepted Answer

To find the number of units needed to achieve a pretax income of $35,000, use the formula: (Fixed Costs + Desired Income) / (Selling Price per Unit - Variable Cost per Unit). Plugging in the values: ($420,000 + $35,000) / ($200 - $130) = 6,500 units.

A Product Sells for $200 Per Unit, and Its Variable