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?

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Definitions:

Fireworks

Pyrotechnic devices used for entertainment purposes that explode to produce colorful lights and sounds.

Classical Conditioning

An educational method that develops through the connection between a stimulus in the environment and a stimulus that naturally occurs, resulting in a conditioned response.

Potty-Trained

The process by which a young child learns to use the toilet for urination and defecation voluntarily.

Fear Dentist

Anxiety or fear associated with visiting the dentist, often resulting in avoidance of dental care.