Chapter 21, Problem 9QS

To determine

Introduction:

Pretax Income is calculated by deducting Total Costs (Variable Costs and Fixed Costs) incurred from the Total Sales of the product. It helps in determination of Sales required to generate a Target Profit/ Income.

Contribution Margin per unit is the difference between Selling Price per unit and Total Variable Costs per unit associated with the product. It represents that portion of Sales Revenue that is not consumed by Variable Costs and so contributes to the coverage of Fixed Costs.

Product units to be sold for SBD Phone Company