Question

Coronado Industries wants to sell a sufficient quantity of products to earn a profit of $250000. If the unit sales price is $9, unit variable cost is $8, and total fixed costs are $200000, how many units must be sold to earn income of $250000?
a) 168,750 units
b) 90,000 units
c) 112,500 units
d) 67,500 units

Answer 1

Answer:

Break-even point in units= 450,000 units

Explanation:

Giving the following information:

Desired profit= $250,000

Sales price is $9

Unitary variable cost= $8

Total fixed costs are $200000

To determine the number of units required, we need to use the break-even point formula, including the desired profit.

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (200,000 + 250,000) / ( 9 - 8)

Break-even point in units= 450,000 units