Cunningham Inc. sells MP3 players for $60 each. Variable costs are $40 per unit and fixed costs total $120000. How many MP3 players must Cunningham sell to earn net income of $280000?
A) 20000.
B) 7000.
C) 5000.
D) 6000.

Question

Quizplus · Accepted Answer

To find the number of MP3 players needed to be sold to achieve a net income of $280,000, we use the formula: (Fixed Costs + Desired Net Income) / (Selling Price per Unit - Variable Cost per Unit). Here, it is ($120,000 + $280,000) / ($60 - $40) = 20,000 units.