The number of units that must be sold to achieve $40,000 of operating income is 617 units.
What is break-even analysis?
Break-even analysis is an accounting concept that can be used to determine the number of units that must be sold to achieve $40,000 of operating income. This can be computed by using the concept of break-even analysis as follows:
Data and Calculations:
Sales units = 500 units
Sales revenue = $75,000
Selling price per unit = $150 ($75,000/500)
Variable costs = $28,000
Variable cost per unit = $56 ($28,000/500)
Contribution margin per unit = $94 ($150 - $56)
Fixed costs = $18,000
Target operating income = $40,000
Break-even point in units to achieve target profit = 617 units ($18,000 + $40,000)/$94
Thus, the number of units that must be sold to achieve $40,000 of operating income is 617 units.
Learn more about break-even analysis at https://brainly.com/question/21137380
