Assume a company produces one product that sells for 55 , has a variable cost per unit of 35 , and has fixed costs of 100,000 .

Question

2 years ago

8

How many units must the company sell to earn a target profit of 50,000 ? a. 7,500 units b. 10,000 units c. 12,500 units d. 15,000 units

1 answer:

Ivenika [448] · Answer 1 · 2023-10-10T03:01:25+03:00

The number of units the company must sell to earn a target profit of 50,000 is 7500.

Given information include:

selling price per unit = 55

variable cost per unit = 35

fixed cost = 100000

target profit = 50000

Using the equation method, for calculating the units that must be sold:

let's assume the units to be sold be 'x'.

Total Sales = total variable expense + fixed expense + target profit

Now, substituting the values in the above formula we get,

55x = 35x + 100000 +50000

55x = 35x +150000

55x - 35x = 150000

20x = 150000

x = 150000/20

x = 7500 units

Hence, The number of units the company must sell to earn a target profit of 50,000 is 7500.

Learn more about target profit:

#SPJ4