Answer:
Quantity of units required to be sold by Kenton is 8,000 units.
TRUE
Breakeven number of units of Kenton is 4,000 units.
FALSE
Target operating income of Kenton is $18,200.
False
Breakeven number of units of Kenton is 2,000 units.
False
Explanation:
1). Target operating income = $14,000 ÷ (1 − 0.3) = $20,000
Quantity of units required to be sold = (Fixed costs + Target operating income) ÷ Contribution margin per unit = ($42,000+$14,000) / $7 = 8,000
2). Fixed costs $42,000 / Contribution margin per unit $7
= 6000 units
3). Target operating income = 42,000 - 14,000 = 28,000
28,000 * 0.3 = 8,400
4). Fixed costs $42,000 / Contribution margin per unit $7
= 6000 units
