Question

How many units would have to be sold to yield a target operating income of​ $26,000, assuming variable costs are​ $27 per​ unit, total fixed costs are​ $2,000, and the unit selling price is​ $32?

Answer 1

Answer:

The number of units must be sold to yield a target operating income of​ $26,000: 5,600 units

Explanation:

Contribution margin per unit = Sales price – Variable cost per unit = $32-$27=$5

The number of units must be sold to meet the target income figure are calculated by using following formula:

The number of units must be sold = (Total fixed cost + Targeted income) / Contribution margin per unit = ($2,000 + $26,000)/$5 = 5,600 units