A product sells for $200 per unit,and its variable costs per unit are $130.Total 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 be sold to achieve a pretax income of $35,000, we use the formula:  Units = (Fixed Costs + Desired Pretax Income) / (Selling Price per Unit - Variable Cost per Unit)  Units = ($420,000 + $35,000) / ($200 - $130)  Units = $455,000 / $70  Units = 6,500.

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