Question

if fixed costs are \\$1,200,000, the unit selling price is \\$240, and the unit variable costs are \\$110, the amount of sales in units (rounded to the nearest whole unit) required to realize an operating income of \\$200,000 is

a. 9,231 units
b. 5,833 units
c. 10,769 units
d. 12,000 units

Explanation:

Identify the given values

Using the Fixed Cost knowledge point

$$
LATEXBLOCK0
$$

Calculate the unit contribution margin

Using the Unit Contribution Margin knowledge point

$$
LATEXBLOCK1
$$

Determine required sales in units

Using the Target Profit Analysis knowledge point

$$
LATEXBLOCK2
$$

Round to the nearest whole unit

Using the Target Profit Analysis knowledge point

$$ \text{Required Sales} \approx 10,769 \text{ units} $$

Answer:

• a. 9,231 units
• b. 5,833 units
• c. 10,769 units (Correct answer)
• d. 12,000 units