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23 December, 21:35

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

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  1. 23 December, 21:48
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    A. 5 comma 600 units

    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
  2. 23 December, 21:56
    0
    A. 5,600 units

    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
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