How many units would have to be sold to yield a target income of $11,000 assuming variable costs are $30 per unit, total fixed costs are $1,000, and the unit selling price is $40?
A)1,200 units
B)1,100 units
C)1,000 units
D)900 units
E)300 units

Question

Quizplus · Accepted Answer

Total contribution margin per unit = unit selling price - variable cost per unit
Total contribution margin per unit = $40 - $30 = $10

To yield a target income of $11,000, we need to find the contribution margin required:

Contribution margin = Target income + Total fixed costs
Contribution margin = $11,000 + $1,000
Contribution margin = $12,000

Now, we can find the number of units required to achieve this contribution margin:

Number of units = Contribution margin / Total contribution margin per unit
Number of units = $12,000 / $10
Number of units = 1,200 units

Therefore, the best choice is A) 1,200 units.

How Many Units Would Have to Be Sold to Yield