Blanchard Company manufactures a single product that sells for $240 per unit and whose total variable costs are $180 per unit. The company targets an annual after-tax income of $900,000. The company is subject to a 40% income tax rate. Assume that fixed costs remain at $954,000.

Blanchard Company manufactures a single product that sells for $240 per unit and whose total variable costs are $180 per unit. The company targets an annual after-tax income of $900,000. The company is subject to a 40% income tax rate. Assume that fixed costs remain at $954,000.

(1) Compute the unit sales to earn the target after-tax net income.

Explanation:

Preliminary computations

Pretax income	= After-tax income / (1 – Tax rate)
	= $900,000 / (1 – 0.40)
	= $900,000 / 0.60
	= $1,500,000

Income taxes	= Pretax income × Tax rate
	= $1,500,000 × 0.40 = $600,000