Baker Company sells its product for $60.In addition,it has a variable cost ratio of 40 percent and total fixed costs of $9,000.How many units must be sold in order to obtain a before-tax profit of $12,000?

Question

Quizplus · Accepted Answer

Let x be the number of units sold.
The revenue from x units sold is 60x.
The variable cost from x units sold is 0.4(60x) = 24x.
The total cost from x units sold is 24x + 9000.
The profit from x units sold is 60x - (24x + 9000) = 36x - 9000.
To obtain a before-tax profit of $12,000, we need 36x - 9000 = 12000.
Solving for x, we get x = 584.
Therefore, the best choice is C) 584 units.

Baker Company Sells Its Product for $60