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 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.
A) 6,500.
Explanation: Units required to earn target pre-tax income of $35,000 = ($35,000 +
$420,000)/$70 = 6,500 units
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