Question

Crane Company wants to sell a sufficient quantity of products to earn a profit of $100000. If the unit sales price is $9, unit variable cost is $8, and total fixed costs are $200000, how many units must be sold to earn income of $100000?

Answer 1

Answer:

Break-even point in units= 300,000 units

Explanation:

Giving the following information:

Desired profit= $100,000

Selling price per unit= $9

Unit variable cost= $8

The total fixed costs are $200,000

To calculate the number of units to be sold, we need to use the break-even point in units formula:

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (200,000 + 100,000) / (9 - 8)

Break-even point in units= 300,000 units