Framing House, Inc. produces and sells picture frames. Variable costs are expected to be $17 per frame; fixed costs for the year are expected to total $130,000. The budgeted selling price is $25 per frame.

The sales units required by Framing House to make a before-tax profit (πB) of $15,000 would be:

Question

The sales units required by Framing House to make a before-tax profit (πB) of $15,000 would be:

Quizplus · Accepted Answer

To calculate the sales units required to make a before-tax profit of $15,000, we use the formula: Sales Units = (Fixed Costs + Desired Profit) / (Selling Price - Variable Costs). Plugging in the given values: Sales Units = ($130,000 + $15,000) / ($25 - $17) = $145,000 / $8 = 18,125 units.