Question

Ivanhoe Corporation has fixed costs of $518,400. It has a unit selling price of $8, unit variable cost of $6.40, and a target net income of $1,620,000. Compute the required sales in units to achieve its target net income.

Answer 1

Answer:

1,336,500 units

Explanation:

Selling price per unit  $8    

Less variable cost       $6.40  

Contribution per unit  $1.60

Fixed cost                      $518,400

Target net income        $ 1,620,000

Total amount required $2,138,400

Sales unit required = total amount required / Contribution per unit

= $2,138,400 / $1.60    

= 1,336,500 units