Malone Printing Company projected the following information for next year: How many units must be sold to obtain an after-tax profit of £67,500?

A) 3,750 units
B) 7,750 units
C) 5,625 units
D) 5,167 units

Question

Malone Printing Company projected the following information for next year: How many units must be sold to obtain an after-tax profit of £67,500?

A) 3,750 units 
B) 7,750 units 
C) 5,625 units 
D) 5,167 units

Quizplus · Accepted Answer

To find out how many units must be sold to obtain an after-tax profit of £67,500, we need to use the formula:
(after-tax profit) = (number of units sold) x (price per unit) x (1 - variable cost %) - fixed costs - tax
In this case, we are given that the after-tax profit is £67,500, the variable cost % is 60%, the fixed costs are £200,000, and the tax rate is 40%.
We are not given the price per unit, so we have to use trial and error to find the number of units that would give us the desired after-tax profit. Starting with a low price per unit, we can then increase it until we get the desired profit.
Using this approach, we find that for a price per unit of £35, the number of units required to obtain an after-tax profit of £67,500 is approximately 7,750.
Therefore, the best choice is B, 7,750 units.

Malone Printing Company Projected the Following Information for Next Year