Discussion
To earn a target profit of 200 000, that firm must sell
Answer: C
Correct answer: 25 000 units
The target profit is treated as an additional fixed cost to be covered:
\[ Q = \frac{F + \text{target}}{c} = \frac{300\,000 + 200\,000}{20} = 25\,000 \ \text{units} \]The same formula gives the break-even quantity when the target is zero, so this is one relation rather than two.
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