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Wang Co. manufactures and sells a single product that sells for $630 per unit; variable costs are $378 per unit. Annual fixed costs are $872,000. Current sales volume is $4,380,000. Management targets an annual pre-tax income of $1,305,000. Compute the unit sales to earn the target pre-tax net income.

Respuesta :

ayokenny2001

,Answer:

See below

Explanation:

Given that:

Selling price = $630

Unitary variable cost = $378,

Fixed costs = $872,000

Desired profit = $1,305,000

We will use the formulae below to calculate the sales in units to be sold

Break - even point (units) = Fixed cost + Desired profits / Contribution margin

Contribution margin

= $630 - $378

= $252

Break even point

= ($872,000 + $1,305,000) / $252

= $2,177,000 / $252

= 8,639 units

Therefore, the unit sales to earn the target pretax net income is 8,639

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