What formula is used to calculate the number of units needed to earn a desired profit?
A)(fixed costs + variable costs)/sales
B)(fixed costs + desired profit)/sales
C)(fixed costs + desired profit)/contribution margin per unit
D)(fixed costs + variable costs)/contribution margin per unit

Question

Quizplus · Accepted Answer

The formula to calculate the number of units needed to earn a desired profit is (fixed costs + desired profit)/contribution margin per unit. This formula takes into account the company's fixed costs, desired profit, and contribution margin per unit to determine the number of units required to earn the desired profit. Option C correctly represents this formula.

What Formula Is Used to Calculate the Number of Units