Barlum Motors produces and sells a small engine used in lawn tractors. Each engine is priced at $850 and the variable cost for each engine is $725. The annual fixed cost is $1,687,500. Barlum Motors operates in a jurisdiction with a graduated tax structure and pays a rate of 18 percent on annual taxable income up to and including $500,000 and a rate of 25 percent on annual income above $500,000.

Required

a. How many units must Barlum Motors sell to break even?

b. Barlum Motors has an after-tax profit target for the year of $920,000. How many units must Barlum Motors sell in order to make the $920,000 requirement?