Question

Zeus, Inc. produces a product that has a variable cost of $9.50 per unit. The company's fixed costs are $40,000. The product sells for $12.00 a unit and the company desires to earn a $20,000 profit. What is the volume of sales in units required to achieve the target profit? (Do not round intermediate calculations.)

Answer 1

Break-even point in units= 26,087

Step-by-step explanation:

Giving the following information:

Selling price= $12

Unitary variable cost= 9.7

Fixed costs= $40,000

Desired profit= $20,000

To calculate the number of units to be sold, we need to use the following formula:

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (40,000 + 20,000) / (12 - 9.7)

Break-even point in units= 26,087