How Many Units Would Have to Be Sold to Yield

question 84

Multiple Choice

How many units would have to be sold to yield a target income of $11,000 assuming variable costs are $30 per unit, total fixed costs are $1,000, and the unit selling price is $40?

• A)1,200 units
• B)1,100 units
• C)1,000 units
• D)900 units
• E)300 units

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs, serving as a measure to assess the profitability of products or services.

Fixed Expenses

Costs that do not change with the level of production or sales, such as rent, insurance, and salaries.

Net Operating Income

Income derived from the main activities of a business, not including interest and tax deductions.

Variable Expenses

Costs that change in proportion to the activity of a business, such as raw materials and direct labor costs.