Break-Even After Income Taxes.

The Wencam Company Ltd. produced and sold 55,000 units during 20x1. The following amounts were obtained from the financial statements for the year ended December 31, 20x1:

Bales RS ee BUS COON MOLE Seto $ 2,475,000 Direct'materials ised: ($) ot 19. AS 2a eee Oa 467,500 Directlabor costs: Gee 3 eee 805,750 Variable overhead incurred ................... 269,500 Fixed overhead incurred ©... 6.6.5 hess oS eiscgcboes 347,800 Selling and administrative costs:

Fixed tees te ee nee ere eee 187,200 WALIAOIS See ak et MOORber Ecoe r rs 129,500

* The relevant range for fixed costs is 10,000 units to 85,000 units.

Expectations for 20x2:

1. Variable and fixed costs are expected to behave in the same manner as indicated above, but inflation is expected to increase costs in general by 12 percent.

2. The selling price 1s expected to be raised by 10 percent.

3. The company's 20x2 income tax rate is expected to be 35 percent.

Required:

How many units would the company be required to sell in 20x2 in order to earn net income after taxes of $211,250? Show all calculations.

(SMA adapted)