The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. Compute the number of units that must be sold in order to achieve a target pretax income of $130,000.
$\begin{array}{ll}
\text { Sales $ (50,000 $ units)}&&\$1,000,000\
\text { Costs:}\
\text { Direct materials } & \$ 270,000 \
\text { Direct labor } & 240,000 \
\text { Fixed factory overhead } & 100,000 \
\text { Variable factory overhead } & 150,000 \
\text { Fixed marketing costs } & 110,000 \
\text { Variable marketing costs } & \underline{50,000}& \underline{920,000} \
\text { Pretax income }&& \underline{\$80,000}
\end{array}$

Question

The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. Compute the number of units that must be sold in order to achieve a target pretax income of $130,000.
$\begin{array}{ll}
\text { Sales $ (50,000 $ units)}&&\$1,000,000\
\text { Costs:}\
\text { Direct materials } & \$ 270,000 \
\text { Direct labor } & 240,000 \
\text { Fixed factory overhead } & 100,000 \
\text { Variable factory overhead } & 150,000 \
\text { Fixed marketing costs } & 110,000 \
\text { Variable marketing costs } &  \underline{50,000}& \underline{920,000} \
\text { Pretax income }&& \underline{\$80,000}
\end{array}$

Quizplus · Accepted Answer

The pretax income can be calculated using the formula:

Pretax income = Sales - (Direct materials + Direct labor + Fixed factory overhead)

Substituting the given values, we get:

$130,000 = Sales - ($270,000 + $240,000 + $1,100,000)

Sales = $1,740,000

To find the number of units that must be sold, we divide the total sales by the selling price per unit:

Number of units = Total sales / Selling price per unit

$1,740,000 / $30 = 58,000

Therefore, the answer is C) 58,621.

The Budgeted Income Statement Presented Below Is for Burkett Corporation