Question

If fixed costs are $1,291,000, the unit selling price is $238, and the unit variable costs are $105, what is the amount of sales in units (rounded to a whole number) required to realize an operating income of $217,000?a. 5,424 unitsb. 11,338 unitsc. 2,067 unitsd. 12,295 units

Answer 1

b. 11,338 units

Step-by-step explanation:

The computation of the amount of sales in units is shown below:

Let us assume the amount of sales in units is X

So, the equation is

Profit = Sales - Variable Expenses - Fixed Cost

where,

Profit = $217,000

Sales = $238 × X

Variable expense = $105 × X

And, the fixed cost is $1,291,000

So, the sales in units is

$217,000 = $238 × X - $105 × X - $1,291,000

$1,508,000 = $238 × X - $105 × X

$1,508,000 = $133 × X

So, the X = 11,338 units