Question

Ivanhoe Corporation has fixed costs of $412,800. It has a unit selling price of $4, unit variable cost of $2.40, and a target net income of $1,290,000. Compute the required sales in units to achieve its target net income.

Answer 1

Answer:

Break-even point in units= 1,064,250

Explanation:

Giving the following information:

Fixed costs= $412,800

Unitary variable cost= $2.4

Selling price= $4

Desired income= $1,290,000

To calculate the sales in units required, we need to use the following formula:

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

Break-even point in units= (412,800 + 1,290,000) / (4 - 2.4)

Break-even point in units= 1,064,250