Question

If fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, what is the amount of sales required to realize an operating income of $200,000?
a. 10,769 units
b. 5,833 units
c. 12,000 units
d. 9,231 units

Answer 1

Answer: The amount of sales required to realize an operating income of $200 000 is a. 10,769 units.

Explanation: We can solve it with a simple equation:

200 000 = 240x - 1 200 000 - 110x

200 000 + 1 200 000 = 240x - 110x

1 400 000 = 130x

1 400 000 / 130 = x

10769, 23077 = x

We check: 240 . 10769,23077 - 1 200 000 - 110 . 10769,23077  = 200000 √