Reference: 12-03
the Axle Division of LaBate Company Makes and Sells

Multiple Choice

Reference: 12-03
The Axle Division of LaBate Company makes and sells only one product. Annual data on the Axle Division's single product follow: $$\begin{array} { | l | l | } \hline \text { Unit selling price } & \$ 50 \\\hline \text { Unit variable cost } & \$ 30 \\\hline \text { Total fixed costs } & \$ 200,000 \\\hline \text { Average operating assets } & \$ 750,000 \\\hline \text { Minimum required rate of return } & 12 \% \\\hline\end{array}$$
-Suppose the manager of the Axle Division desires an annual residual income of $45,000. In order to achieve this, Axle should sell how many units per year?

A) 19,500.
B) 18,250.
C) 16,750.
D) 14,500.