Question

Green Manufacturing Company produces a product that has a variable cost of $30 per unit. Fixed costs amount to $240,000. The selling price of the product is $36. How many units of product must Green produce and sell to break even?

40,000 units

none of the above.

48,000 units

46,667 units

4.

Green Manufacturing Company produces a product that has a variable cost of $30 per unit. Fixed costs amount to $240,000. The selling price of the product is $36. How many units of product would Green be required to sell in order to earn a desired profit of $180,000?

74,000 units

70,000 units

71,667 units

none of the above.

Answer 1

40,000 units

70,000 units

Step-by-step explanation:

Price = $36

Variable cost = $30

Fixed Cost = $240,000

Desired Profit = $180,000

Break-even point = Fixed cost / ( Price - variable cost )

Break-even point = $240,000 / ( $36 - $30 ) = 40,000 units

Units required for desired profit = ( fixed cost + Desired profit ) / contribution per unit

Units required for desired profit = ( $240,000 + $180,000 ) / $6

Units required for desired profit = 70,000 units