Question

Calculator For the current year ending April 30, Philip Company expects fixed costs of $70,000, a unit variable cost of $45, and a unit selling price of $95. a. Compute the anticipated break-even sales (in units). units b. Compute the sales (in units) required to realize an operating profit of $8,000. units

Answer 1

1,560

Step-by-step explanation:

Answer 2

a. 1,400 units

b. 1,560 units

Step-by-step explanation:

The computation is shown below:

a. For break even sales in units

= Fixed cost ÷ (Unit selling price - unit variable cost)

= $70,000 ÷ ($95 - $45)

= $70,000 ÷ ($50)

= 1,400 units

b. In case when the firm wants to realize an operating profit, the required sales is

= (Fixed cost + operating profit) ÷ (Unit selling price - unit variable cost)

= ($70,000 + $8,000) ÷ ($95 - $45)

= ($78,000 ÷ ($50)

= 1,560 units