“How to Calculate Required Sales Volume to Achieve Target After-Tax Profit: A Universal Company Case Study”

To determine how many units Universal Company needs to sell to achieve the target after-tax profit of $1,200,000, we can use the following formula:

Required Sales Volume (in units)=Fixed Costs + Target After-Tax ProfitSelling Price per Unit – Variable Cost per Unit×(1−Tax Rate)Required Sales Volume (in units)=Selling Price per Unit – Variable Cost per Unit×(1−Tax Rate)Fixed Costs + Target After-Tax Profit​

Let’s plug in the values given in the question:

Fixed Costs = $3,600,000 Target After-Tax Profit = $1,200,000 Selling Price per Unit = $20 Variable Cost per Unit = $5.00 Tax Rate = 20% (0.20 as a decimal)

Now, we can calculate the required sales volume:

Required Sales Volume=$3,600,000+$1,200,000($20−$5.00)×(1−0.20)Required Sales Volume=($20−$5.00)×(1−0.20)$3,600,000+$1,200,000​

First, calculate the numerator:

Numerator = $3,600,000 + $1,200,000 = $4,800,000

Next, calculate the denominator:

Denominator = ($20 – $5.00) \times (1 – 0.20) Denominator = ($15.00) \times (0.80) Denominator = $12.00

Now, divide the numerator by the denominator to find the required sales volume:

Required Sales Volume=$4,800,000$12.00Required Sales Volume=$12.00$4,800,000​

$\text{Required Sales Volume}=400,000\text{ units}$

So, Universal Company needs to sell 400,000 units to achieve the target after-tax profit of $1,200,000.

However, none of the options provided in the question matches the calculated value of 400,000 units. Therefore, the correct answer is “E. none of the above.”