If fixed costs are $650,000 and the unit contribution margin is $30, the sales necessary to earn an operating income of $30,000 are 14,000 units.

Question

Quizplus · Accepted Answer

To calculate the sales necessary to earn a specific operating income, you use the formula: (Fixed Costs + Desired Operating Income) / Unit Contribution Margin. Plugging in the numbers: ($650,000 + $30,000) / $30 = 22,667 units, not 14,000 units.

If Fixed Costs Are $650,000 and the Unit Contribution Margin