Question

A company's fixed costs are $1,500,000, the unit selling price is $250, and the unit variable costs are $130. The amount of sales required to realize an operating income of $200,000 is Group of answer choices

Answer 1

The answer is 14,167 units

Step-by-step explanation:

Target sales is the amount of sales a company has projected itself to sell within a particular period.

Target sales(in units) =

(Fixed cost + target income) / contribution margin

Where contribution margin is sales in unit minus variable costs

($1,500,000 + $200,000) / $250 - $130

$1,700,000/$120

=14,167 units

Therefore, 14,167 units is the amount of sales that will need to be recorded to generate an operating income of $200,000