Answer:
Sales unit to achieve target profit =6,550 units
Explanation:
Break-even point is the level of activity that achieves no profit or loss. At this level profit is zero because the the total revenue is equal to total cost.
The break-even point is calculated as
Break -even in units = total general fixed cost/(selling price - variable cost)
ley represent tah variable cost per unit with letter "y"
5,000 = 50,000 / (25 - y)
cross multiply
5000× (25 - y) = 50,000
125000 - 5000 y = 50,000
collect like terms
125,000 - 50,000 = 5000 y
75000 = 5,000y
divide both sides by 5,000
y = 75,000/5000 = 15
<em>Variable cost per unit = 15</em>
Sales units to achieve target profit = Fixed cost + target profit/(selling price - variable cost per unit)
Sales unit to achieve target profit
= (50,000 + 15,500)/(25-15)
= 6,550
Sales unit to achieve target profit =6,550 units
