Zachary Company Wishes to Earn After-Tax Net Income of $18,000

question 22

Multiple Choice

Zachary Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000 and the contribution margin is $6.00 per unit.Zachary's tax rate is 40%.The number of units that must be sold to breakeven is ________.

• A)14,000
• B)17,000
• C)19,000
• D)21,500

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Definitions:

Full Capacity

The maximum level of output that a company can sustain over a period of time using its current resources, without compromising quality or efficiency.

Cost-Based Transfer Prices

Pricing methods for transactions within an organization based on the costs incurred in producing or acquiring the transferred goods or services.

Standard Variable Cost

The estimated average variable cost per unit of output, factoring in material, labor, and overhead expenses.

Mark-Up

The percentage added to the cost of goods to determine the selling price, covering overhead and profit.