If fixed costs are $700,000 and the unit contribution margin is $17, what amount of units must be sold in order to realize an operating income of $100,000?
A) 5,000
B) 41,176
C) 47,059
D) 58,882

Question

Quizplus · Accepted Answer

The formula to calculate the break-even point in units is:
Break-even point (in units) = Fixed Costs / Unit Contribution Margin

Substituting the given values:
Break-even point (in units) = $700,000 / $17 = 41,176.47

To calculate the operating income, we use the formula:
Operating Income = (Unit Contribution Margin x Number of units sold) - Fixed Costs

Substituting the values:
$100,000 = ($17 x Number of units sold) - $700,000
$800,000 = $17 x Number of units sold
Number of units sold = $800,000 / $17 = 47,058.82

Therefore, the answer is C) 47,059 units.

If Fixed Costs Are $700,000 and the Unit Contribution Margin