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A Firm Produces and Sells a Product with a Contribution

question 186

Essay

A firm produces and sells a product with a contribution margin of $32 per unit. The firm is presently selling 90,000 units and earning $240,000 in after-tax income. Taxes are $80,000 at a 25% tax rate. If the firm desires to increase its after-tax income to $300,000, how many more units must it sell?


Definitions:

Decimal Equivalents

Numerical values expressed in decimal form that correspond to fractions or percentages.

Percent Equivalents

Representations of fractions or ratios as percentages, useful for comparing proportions.

Evaluate

To assess or determine the value, significance, or condition of something typically in a detailed and systematic way.

Evaluate

The process of examining something to determine its value or worth, often in a careful and systematic way.

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