Question

Given the following data Calculate the number of units that must be sold to reach a target operating income of $300             Sales price per unit = ................... $10             Variable cost per unit = ................ $ 7             Fixed costs = ............................ $3,000

What is the total number of units that must be sold to reach a target operating income of $300?

a). 100

b). 3,000

c). 1,100

d). 1,000

Answer 1

c). 1,100

Number of units to achieve target income

=

Target Contribution margin / Contribution margin per unit

=

$ 3,300.00

/

$       3.00

=

1,100

Working;

# 1

Sales price per unit

$       10.00

Less Variable cost per unit

$         7.00

Contribution margin per unit

$         3.00

# 2

Fixed Costs

$ 3,000.00

add Terget operating income

$     300.00

Target contribution margin

$ 3,300.00