Target Profit Units Calculation Steps:

• Contribution margin per unit = selling price - variable cost = $20 -$8 = $12.
• Total costs to cover = fixed costs + target profit = $7000 +$20000 = $27000.
• Units needed = total costs to cover / contribution margin per unit = $27000 /$12 = 2250.
• Produce and sell 2250 units to achieve exactly $20000 profit.

Why D is correct:

• 2250 units generate $27000 contribution, covering$7000 fixed costs for $20000 net profit, per the target profit formula.

Why the others are wrong:

• A. 1000 units yield $12000 contribution minus$7000 fixed = $5000 profit (too low).
• B. 1350 units yield $16200 contribution minus$7000 = $9200 profit (too low).
• C. 1667 units yield ~7000 = ~$13000 profit (too low).

Final answer: D