Question

If ap sells the toaster ovens for $16 each, how many units will it have to sell to make a profit of $60,000 before taxes?

Answer 1

If $60,000.00 is the total sales from selling toaster ovens at $16.00 each, then the total units of toaster ovens sold would be 3,750.00 units. If expenses where given, say for example, 40% of the sales, with a profit before tax of $60,000.00, then total sales should be $84,000.00 equivalent to 5,250 units of toaster ovens.

Answer 2

Answer:

AP have to sell 88,000 units to make a profit of $60,000 before taxes.

Explanation:

The question is incomplete. The variable and fixed costs are missing.

The variable costs are:

• Manufacturing: $7/unit
• Administrative: $4/unit
• Selling: $2/unit

The fixed costs are:

• Manufacturing: $132,000
• Administrative: $72,000

The total variable costs per unit are (7+4+2) = 13 $/unit.

The total fixed costs are: (132,000+72,000) = $204,000.

The profit before taxes is defined in this case as the difference between sales and total costs.

Sales is the product between the price and the quantity or number of units sold.

Then, we can express the profit E as:

$E=S-TC\\\\E=P\cdot Q-(VC\cdot Q+FC)\\\\E=(P-VC)-FC$

being P: price per unit, VC: variable cost per unit, Q: units sold, FC: fixed costs.

For a profit E=60,000, we can calculate the quantity Q as:

$E=(P-VC)Q-FC\\\\60,000=(16-13)Q-204,000\\\\60,000=3Q-204,000\\\\3Q=60,000+204,000=264,000\\\\Q=264,000/3=88,000$

Then, AP have to sell 88,000 units to make a profit of $60,000 before taxes.