Answer:
a. 6400 Units
b. 7200 units
Explanation:
a.
Break even point in Units = Fixed cost / Contribution margin per unit
Fixed cost = $800000
Contribution margin per unit = Sale price - Variable cost per unit
= $300 - $175 = $125.
Break even point = $800000 / $125 = 6400 Units.
b.
Target profit units = (Fixed cost + Target profit) / Contribution margin per unit
= ($800000 + $100000) / $125
= $900000 / $125
= 7200 Units.
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