The following information relates to financial projections of Stewart Company:Projected sales60,000 unitsProjected variable costs$2

Accounting Dec 06, 2020

The following information relates to financial projections of Stewart Company:Projected sales60,000 unitsProjected variable costs$2.00 per unitProjected fixed costs$50,000 per yearProjected unit sales price$7.00How many units would Stewart Company need to sell (target income volume) to earn a profit before taxes of $10,000?A.25,714B.8,571C.10,000D.12,000

Expert Solution

Break even (units)= Fixed cost+ Profit/Contrbution margin per unit

= (50000+10000)/(7-2)

= 60000/5

= 12000 units

Option D is correct

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