Product X Sells for $35 Per Unit and Has Related

question 96

Multiple Choice

Product X sells for $35 per unit and has related variable costs of $25 per unit.The fixed costs of producing product X are $65,000 per month.How many units of product X must be sold each month to earn a monthly operating income of $85,000?

• A)2,833 units
• B)6,000 units
• C)15,000 units
• D)10,000 units

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Definitions:

Return on Investment

A measure of the profitability of an investment, calculated as the net profit of the investment divided by the initial cost.

Controllable Fixed Costs

Expenses that can be managed or influenced by decisions made by a company's management, such as advertising expenditures.

Operating Assets

Assets used by a business in its day-to-day operations to generate revenue.

Controllable Margin

A financial metric that represents the amount of profit or contribution margin that management can directly influence through its decisions.