Harrison Manufacturing has the following product information available:
$\begin{array}{ll}
\text { Sales price } & \$ 50 \text { per unit } \
\text { Variable costs } & \$ 26 \text { per unit } \
\text { Fixed costs } & \$ 87600
\end{array}$
If Harrison is in the 35% tax bracket,how many units need to be sold in order to earn an after-tax target profit of $260 000?

Question

Quizplus · Accepted Answer

First, calculate the pre-tax profit needed to achieve an after-tax target profit of $260,000. Pre-tax profit = Target profit / (1 - Tax rate) = $260,000 / (1 - 0.35) = $400,000. Next, calculate the contribution margin per unit: Sales price per unit - Variable cost per unit = $50 - $26 = $24. Then, calculate the total units needed to cover both the fixed costs and the target pre-tax profit: (Fixed costs + Target pre-tax profit) / Contribution margin per unit = ($87,600 + $400,000) / $24 = $487,600 / $24 = 20,317 units.

Harrison Manufacturing Has the Following Product Information Available If Harrison Is in the 35% Tax Bracket,how Many Units