Question

A company produces a product with variable costs of $2.50 per unit. The product sells for $5.00 per unit. The company has fixed costs of $3,000 and desires a profit of $10,000. The sales level in units to achieve the desired profit is________ units.

Answer 1

Answer:26000

Explanation:

Answer 2

Answer:

The sales level in units to achieve the desired profit is 5,200 units.

Explanation:

Fixed cost = $ 3,000

Desired profit = $10,000

Lets the number of units sales is N.

Total variable cost = $2.5*N

Sales revenue = $5*N

Net Profit = Sales revenue – cost of goods sold – operating expenses

$10,000 = ($5*N) – ($2.5*N) - $3,000

($5*N) – ($2.5*N) = $ 10,000 + $ 3,000

$2.5*N = $ 13,000  

N = $13,000/$2.5

   = 5,200 units

Therefore, The sales level in units to achieve the desired profit is 5,200 units.