Question

A firm sells a product for a per unit price of $6,000. Variable costs per unit are $4,800. Total fixed costs are $14,000. How many unit sales are required to earn a profit of $49,000?

Answer 1

Answer:

52.5 units

Explanation:

Contribution margin per unit:

= (Sales price per unit - variable cost per unit)

= $6,000 - $4,800

= $1,200

Unit sales to attain target profit:

= (Fixed expense + Target profit) ÷ Contribution margin per unit

= ($14,000 + $49,000) ÷ $1,200

= 52.5 units

Hence, 52.5 units are required to earn a profit of $49,000.