If Fixed Costs Are $1,200,000, the Unit Selling Price Is

question 88

Multiple Choice

If fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, what is the amount of sales required to realize an operating income of $200,000?

• A) 9,231 units
• B) 12,000 units
• C) 10,769 units
• D) 5,833 units

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Definitions:

Fixed Cost

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

Expense Equation

A formula used to calculate the total expenses by adding various costs and expenses associated with operating a business or managing personal finances.

Markup

The amount added to the cost price of goods to cover overhead and profit.

Wholesale Price

The cost at which goods are sold to retailers by the manufacturers or distributors, which is typically lower than the retail price.