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Lwipa Chishimba produces solar panels. The company has annual fixed costs totaling $10, 000,000 and...

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Accounting

Lwipa Chishimba produces solar panels. The company has annual fixed costs totaling $10, 000,000 and variable costs of $600 per unit. Each unit of product is sold for $1, 000.

Lwipa expects to sell 70,000 units this year. Assume a tax rate of 35 percent.

Required:

a. How many units must be sold to earn an annual profit of $2, 000,000 after taxes?

b. What amount of sales dollars is required to earn an annual profit of $500, 000 after taxes?

c. Refer to requirement a. What would happen to the number of units required to earn $2, 000,000 in operating profit if the company were a non-profit organization that did not incur income taxes? Explain. (Detailed calculations are not necessary but may be helpful in confirming your answer.) (10 marks)

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