Question

Piper Technology's fixed costs are $1,500,000, the unit selling price is $250, and the unit variable costs are $130. What is the amount of sales in units (rounded to a whole number) required to realize an operating income of $200,000? a.16,000 units b.14,167 units c.11,538 units d.12,500 units

Answer 1

Answer:

141,667 units

Explanation:

The sales less the variable cost gives the contribution margin. The contribution margin less the fixed cost gives the net operating income.

As such, the net operating income/loss is the difference between the sales and the total costs .

Let the amount of sales in units be y then,

250y - 130y - 1,500,000 = 200,000

120y = 1,700,000

y = 1700000/12

= 141,667 units