If the selling price per unit of a product is $50,variable costs per unit are $40,and total fixed costs are $50 000,a company must sell 6000 units to make a target operating profit of $10 000.

Question

Quizplus · Accepted Answer

To calculate the break-even point, we can use the formula:

Break-even point (in units) = Fixed Costs / (Selling Price per unit - Variable Costs per unit)

Plugging in the numbers given:

Break-even point (in units) = $50,000 / ($50 - $40) = 5000 units

To make a target operating profit of $10,000, we need to sell 5000 + (Operating Profit / Contribution Margin per unit) units.

Operating Profit = $10,000

Contribution Margin per unit = Selling Price per unit - Variable Costs per unit = $50 - $40 = $10

Substituting:

5000 + ($10,000 / $10) = 6000 units

Therefore, the answer is A: True.

If the Selling Price Per Unit of a Product Is