Target Net Incomeand Income Taxes Example

How many units must be sold?

Revenues – Variable costs – Fixed costs

= Target net income ÷ (1 – tax rate)

$70Q – $42Q – $84,000 = $35,711 ÷ 0.70

$28Q = $51,016 + $84,000

Q = $135,016 ÷ $28 = 4,822 pairs of pants

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