Question

How many units would have to be sold to yield a target operating income of $ 24 comma 000​, assuming variable costs are $ 28 per​ unit, total fixed costs are $ 4 comma 000​, and the unit selling price is $ 33​? A. 5 comma 600 units B. 800 units C. 1 comma 000 units D. 1 comma 218 units

Answer 1

A. 5 comma 600 units

Step-by-step explanation:

The profit is a function of the sales and cost of an organization. The cost elements are in two groups namely; Fixed cost and variable cost. The variable cost is a function of the level of activities.

Given;

Targeted income = $24,000

Variable cost per unit = $28

Total fixed cost = $4,000

Unit selling price = $33

Let the number of units be u

33u - (28u + 4000) = 24000

5u = 28000

u = 5600

The right answer is A. 5 comma 600 units

Answer 2

A. 5,600 units

Step-by-step explanation:

selling price less variable price = contribution per unit

33 -28 = 5

each units generates 5 contribution to pay up the fixed cost and make a gain

target: 4,000 fixed cost + 24,000 income = 28,000

target / contribution per unit = required sales volume

28,000 / 5 = 5,600 untits

By selling this amount of units the company will pay up their fixed cost and achieve a projected gain for $24,000