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Zhao Co. has fixed costs of $416,000. Its single product sells for $185 per unit, and variable costs are $121 per unit. Compute the level of sales in units needed to produce a target (pretax) income of $128,000.

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Answer:

  8,500 units

Step-by-step explanation:

The contribution margin from each unit is ...

  $185 -121 = $64

To accumulate a total contribution that will cover the fixed costs and the desired income, you require sales of ...

  ($416,000 +128,000)/($64/unit) = 8,500 units