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For its relevant range of production and sales, the Doggie Door, Corp. has the following cost behavior for its only product. The company is able to operate without any change in inventory levels for the beginning of the year to the end of the year.
Variable costs of production $25 per unit
Variable costs of sales and administration $25 per unit
Fixed costs of production $100,000 per year
Fixed costs of sales and administration $75,000 per year
Question 1: Assuming that the product is sold for $100 per unit, how many units must be produced and sold if the operating income is to be $25,000?
Option A. 4,000
Option B. More information is needed in order to answer the question
Option C. 8,000
Option D. 7,000
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