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

Question

3 years ago

10

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

1 answer:

ruslelena [56] · Answer 1 · 2022-11-19T05:45:34+03:00

Answer:

A 6,500

Explanation:

The number of units to be sold is calculated as;

= (Pretax income + Fixed costs) ÷ Contribution margin

Given that;

Pretax income = $35,000

Fixed costs = $420,000

Contribution margin

= Selling price per unit - Variable cost per unit

= $200 - $130

= $70

= ($35,000 + $420,000) ÷ $70

= 6,500 units