Question

Starling Co. manufactures one product with a selling price of $18 and variable cost of $12. Starling’s total annual fixed costs are $38,400. If operating income last year was $28,800, what was the number of units Starling Sold?

Answer 1

The number of units that Starling Co. sold was 11200

Explanation:

Given -

Operating income = $28,800

Fixed cost = $38,400

Selling price of one unit = $12

Variable cost = $12

Number of units sold, n = ?

Contribution  margin per unit = $18 - $12

                                                 = $6

$n = \frac{operating income + fixed cost}{contribution margin per unit}$

$n = \frac{28800 + 38400}{6} \\\\n = \frac{67200}{6} \\\\n = 11200$

Therefore, number of units that Starling Co. sold was 11200