A Company Has Total Fixed Costs of $200,000

question 50

Essay

A company has total fixed costs of $200,000. Its product sells for $25 per unit and variable costs amount to $15 per unit. The company wishes to earn an after-tax income of $35,000. Assume that the company has a 30% tax rate. How many units must be sold to achieve this after-tax income level?

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Definitions:

Knowledge

The understanding, awareness, or familiarity gained through experience or study.

Observation

Observation involves carefully watching, listening, and noting the characteristics or behavior of a subject or phenomenon without direct interaction or manipulation.

Systematic Tests

Systematic tests are structured methods used to evaluate or measure specific characteristics, abilities, or processes in a consistent and standardized manner.

Hypotheses

Proposed explanations for a phenomenon, made as a starting point for further investigation, that can be tested by experimentation or observation.