Assume the following information:
How many units must be sold to generate a profit of $50,000?
A) 4,000 units
B) 2,500 units
C) 3,250 units
D) 2,750 units

Question

Assume the following information:  
 How many units must be sold to generate a profit of $50,000?
A) 4,000 units 
B) 2,500 units 
C) 3,250 units 
D) 2,750 units

Quizplus · Accepted Answer

SUPPORTING CALCULATIONS:
Contribution per unit = (Selling price per unit × Contribution margin ratio) = ($200 × 0.50)
Contribution per unit = $100
Number of Units to Earn Target Income = (Total Fixed Cost + Target Income) / Contribution Margin per Unit
Number of units to earn target income = ($275,000 + $50,000) / $100
Number of units to earn target income = 3,250 units

Assume the Following Information