If the fixed costs are $2,400, targeted operating profits is $1,200, selling price per unit is $2, and the contribution margin ratio is 40%, then the required sales volume is 9,000 units.

Question

Quizplus · Accepted Answer

To find the required sales volume, we need to calculate the contribution margin per unit, which is 40% of the selling price ($2), giving $0.80 per unit. The total contribution margin needed is the sum of fixed costs and targeted operating profits, which is $2,400 + $1,200 = $3,600. Dividing $3,600 by the contribution margin per unit ($0.80) gives a required sales volume of 4,500 units, not 9,000 units.

If the Fixed Costs Are $2,400, Targeted Operating Profits Is