Answer :
The firm needs to sell 6,810 units to earn income of $41,210.
To calculate the number of units required to earn a desired income, the contribution margin per unit needs to be determined. The contribution margin is the difference between the selling price and the variable cost per unit.
In this case, the contribution margin is $205 - $134 = $71 per unit.
To calculate the number of units required to earn a desired income, the formula is:
(units sold) x (contribution margin) - (fixed costs) = (desired income)
Substituting the given values, we get:
(units sold) x $71 - $421,000 = $41,210
(units sold) x $71 = $462,210
(units sold) = $462,210 / $71
(units sold) = 6,510
Therefore, the firm needs to sell 6,810 units to earn income of $41,210.
Learn more about desired income here.
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