Company must manufacture and sell to yield before-tax profit

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Reference no: EM131607769

A company produces a gear that is used by several lawnmower manufacturing companies. Equipment to manufacture the gear will cost $500,000 and will have a salvage value of $50,000 at the end of 10 years. The base cost of operation is $300,000 per year. The cost of manufacturing is $2.50 per gear, and these gears are sold at $6.00 per unit. If straight-line depreciation is used, what is the number of units that the company must manufacture and sell to yield a before-tax profit of 20%?

Reference no: EM131607769

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