Question
Sacramento Company produces toys and other items for use in beach and resort areas. A small, inflatable toy has come onto the market that the
Sacramento Company produces toys and other items for use in beach and resort areas. A small, inflatable toy has come onto the market that the company is anxious to produce and sell. The new toy will sell for $4 per unit. Enough capacity exists in the company's plant to produce 20,000 units of the toy each month. Variable costs to manufacture and sell one unit would be $1.25, and fixed costs associated with the toy would total $35,000 per month.
Question : Suppose Sacramento wants to achieve an after-tax profit of $15,000, how many units of inflatable toys do they have to sell? Their expected tax rate is 30%.
A) 18,182 B) 12,727 C) 20,000 D) 20,519 E) 30,909
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