Question

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.

Answer 1

Answer:

Units to be sold to achieve target profit= 10,694.4 units

Explanation:

The units to be sold to achieve the target profit =

(Total general fixed cost + the target profit)/(selling price - unit variable cost)

Unit  to be sold = (800,000 + 1,125,000)/(450-270)

                          = 10,694.4 units