Question

A manufacturer has invested $120,000 in a new product and wants to set a price to earn a $80,000 profit. The variable cost per unit is $20 and the company sells the units at $100.

Answer 1

Answer: 500

Explanation:

The remainder of the question is:

How many units does the company need to sell to reach the target profit?

The required sales to break even will be calculated as:

= (Fixed cost + Required profit) / ( Price per unit - Variable cost)

= (120000 - 80000) / (100 - 20)

= 40000/80

= 500

The company needs to sell 500 units.