Question

A company desires to sell a sufficient quantity of products to earn a profit of $400,000. If the unit sales price is $20, unit variable cost is $12, and total fixed costs are $800,000, how many units must be sold to earn net income of $400,000?
A) 225,000 units
B) 150,000 units
C) 120,000 units
D) 90,000 units

Answer 1

Answer:

Number of units to be sold = 150000

So option (b) is correct option

Explanation:

We have given net income = $400000

Unit sales price = $20

Unit variable cost= $12

Total fixed cost $800000

Units must be sold to earn net income of $400,000 =

$=profit+\frac{total\ fixed\ cost}{sale\ price}-ubit\ variable\ cost=400000+\frac{800000}{20}-12=150000units$

So number of units to be sold = 150000

So option (b) is correct option