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A company desires to sell a sufficient quantity of products to earn a profit of $400000. If the unit sales price is $16, unit variable cost is $12, and total fixed costs are $800000, how many units must be sold to earn net income of $400000?

Respuesta :

Answer:

300,000 units

Explanation:

In the given question we need to calculate break even point with given profit, i.e. Fixed cost + desired profit = $800,000 + $400,000 = $1,200,000

Contribution per unit = Selling price - Variable cost = $16 - $12 = $4

Break Even Point with profit in units = (Fixed Cost + Profit)/Contribution per unit

= $1,200,000/$4 = 300,000 units.

Total units to be sold = 300,000 units.

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