Solution a:
Selling price per unit = $80
Variable cost per unit = $60
Contribution margin per unit = $80 - $60 = $20 per unit
Fixed costs = $2,000,000
Break even point in sales units = Fixed costs / contribution margin per unit = $2,000,000 / $20 = 100000 units
Solution b:
Unit sales required to earn target profit = (Fixed costs + Desired profit) / Contribution margin per unit
= ($2,000,000 + $250,000) / $20 = 112500 units
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