Question

What level of output would generate a net income of $15,000 if a product sells for $24.99, has unit variable costs of $9.99, and total fixed costs of $55,005?

Answer 1

Data given:

Selling price of each unit product = $24.99

Variable cost of producing each unit of product = $9.99

Total fixed cost of producing units of product = $55005

Output or number of units to be produced to generate a net income of $15000 = ?

Using the above information, we can find the required level of output as -

Let the required number of units to be produced be "x".

1. Revenue generated by selling "x" units of product can be computed as -

  

2. Cost of producing "x" units of product can be computed as -

3. Net revenue generated from producing and selling "x" units of product can be computed as -

Thus, the number of units to be produced (output) to generate a net income of $15000 is 4667 units .