Question

If fixed costs are $400,000 and the unit contribution margin is $20, how many units must be sold in order to realize an operating income of $250,000?
a. 45,000
b. 32,500
c. 7,500
d. 20,000

Answer 1

In order to generate an operational profit of $250,000 with $400,000 in fixed expenditures and a unit contribution margin of $20, 32,500 units must be sold.

$400,000 / $20 = 20,000 units for break-even, which is calculated as fixed costs minus contribution margin. Break-even plus desired income equals ($400,000 + $250,000) / $20 = 32,500. Contribution margin equals (fixed costs + desired operating income).

What kinds of expenses are examples?

The full cost of a commodity or service is known as an expenditure. For instance, a business might invest $10 million in a piece of machinery that it expects to last only five years. This would be seen as a $10 million capital expense.

To know more about expenditures

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