Answer:
250 dresses
Explanation:
The first task would be to compute before tax net income when after tax net income is $21,000 at the tax rate of 30%
After tax net income=before tax net income*(1-t)
t is the tax rate of 30% or 0.30
after tax net income is $21,000
$21000=before tax net income*(1-0.3)
$21,000=0.7*before net income
before tax net income=$21,000/0.7=$30,000
Target units for before tax net income of $30,000 is computed thus:
target number of dresses=fixed cost+target profit/contribution per unit
fixed cost is $120,000
contribution per unit=sales price-variable cost
=$1,100-$500=$600
target number of dresses=($120,000+$30,000)/$600=250 dresses
