A company has fixed costs of $320,000 and a contribution margin per unit of $15.If the company wants to earn a target $40,000 pretax income,how many units must be sold (rounded to the nearest whole unit)?
A)24,000.
B)21,333.
C)18,666.
D)2,667.
E)20,000.

Question

Quizplus · Accepted Answer

The correct answer is A.The contribution margin per unit is $15, and the company wants to earn a target $40,000 pretax income. So, the number of units that must be sold is $40,000/$15 = 2,666.67. Rounded to the nearest whole unit, this is 2,667 units.

A Company Has Fixed Costs of $320,000 and a Contribution