Answer the following questions using the information below:
Koscuiszko Chalet,Inc.sells burgers during the major ski season.During the current year 11 000 burgers were sold resulting in $220 000 of sales revenue,$55 000 of variable costs,and $24 000 of fixed costs.
-The number of burgers that must be sold to achieve $75 000 of operating profit is:
A)6600 burgers.
B)7500 burgers.
C)8400 burgers.
D)None of these answers are correct.

Question

Quizplus · Accepted Answer

To achieve $75,000 of operating profit, the company needs to earn $75,000 + $24,000 (fixed costs) = $99,000. Since each burger contributes $220,000/11,000 = $20 to sales revenue, the company needs to sell 99,000/20 = 4,950 burgers. However, since the question asks for the number of burgers that must be sold to achieve $75,000 of operating profit, we need to add back the number of burgers that were sold to cover variable costs. Since each burger contributes $20 - $5 = $15 to contribution margin, the company needs to sell 55,000/15 = 3,667 burgers to cover variable costs. Therefore, the total number of burgers that must be sold to achieve $75,000 of operating profit is 4,950 + 3,667 = 8,617 burgers.

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