Strongsville Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000 and the contribution margin is $6.00 per unit.Strongsville's tax rate is 40%.The number of units that must be sold to earn the targeted net income is ________.
A)14,000
B)17,000
C)19,000
D)21,500

Question

Quizplus · Accepted Answer

To calculate the number of units, we use the following formula:

Target net income = (Contribution margin per unit x Number of units) - Fixed costs - Taxes

Substituting the given values, we get:

$18,000 = ($6 x Number of units) - $84,000 - (0.4 x $6 x Number of units)

Simplifying and solving for Number of units, we get:

Number of units = 19,000

Therefore, the answer is choice C: 19,000 units.

Strongsville Company Wishes to Earn After-Tax Net Income of $18,000