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Financial & Managerial Accounting
Found in: Page 834
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

SBD Phone Company sells its waterproof phone case for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per unit. Compute the units of product that must be sold to earn a pre-tax income of $200,000. (Round to the nearest whole unit.)

The business entity will sell 6,704 units to earn a pre-tax income of $200,000.

See the step by step solution

Step by Step Solution

Step 1: Definition of Break-Even Units

The number of units that a business entity must sell to achieve the situation of no-profit, no-loss is known as break-even units. It is calculated using the fixed cost and the contribution margin per unit.

Step 2: Units to be sold for pre-tax income of $200,000

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