Sales of a diet drink have not been as high as expected. To combat this, the marketing manager of Opaque, Inc., is planning an extensive advertising campaign costing $60,000. The president is concerned that the market is saturated with other diet drinks and colas to the point that the demand is not sufficient to absorb the extra volume that must be sold to achieve management’s budgeted aftertax net income.

Based on a budgeted sales volume of 75,000 cases, the fixed expenses per case are $30 while unit variable expenses are $20 per case. The budgeted aftertax income at this level is

$350,000.

Required:

a. Calculate how many total units must be sold to achieve the budgeted aftertax income of $350,000 if the advertising campaign is undertaken and cost behavior and the unit sales price remain the same. Assume the company is in a 30 percent tax bracket. Round all figures to the nearest dollar.

b. Prove your answer to Requirement a.