Answer:
8,000 units
Explanation:
Given that,
Selling price = $25.00 per unit
Total fixed expenses = $65,000 per year
Break even sales in units = 6,500
Target profit = $15,000
Break-even sales in dollar value:
= Break even sales in units × Selling price per unit
= 6,500 × $25.00 per unit
= $162,500
Break-even Point = Fixed Costs ÷ Contribution Margin per Unit
$162,500 = $65,000 ÷ Contribution Margin per Unit
Contribution Margin per Unit = $65,000 ÷ $162,500
= $0.4 per unit
Sales amount:
= (Fixed costs + Target profit) ÷ Contribution margin per unit
= ($65,000 + $15,000) ÷ $0.4 per unit
= $200,000
Therefore,
Sales in units = Sales in amount ÷ Selling price per unit
= $200,000 ÷ $25
= 8,000 units
