Answer:
Number of units needed to reach the operating income of 80,000: 5,200 units
Explanation:
Please find the below for detailed calculations and explanations:
To achieve $80,000 of operating income, denote the number of units needs to be sold is x.
For each unit sold, the incremental in profit will be 20.
Thus, to achieve the profit of 80,000, the amount of x units sold will generate the profit before fixed cost that covers 24,000 fixed cost and 80,000 targeted profit. So, we have:
80,000 + 24,000 = 20x <=> x = 5,200 units.
* For quick calculation purpose, we may apply the formular: Units need to be sold to achieve targeted income = (Fixed cost + targeted income)/ Contribution margin per unit in monetary form.
