If fixed costs are $450,000 and the unit contribution margin is $50, the sales necessary to earn an operating income of $50,000 are 10,000 units.

Question

Quizplus · Accepted Answer

To calculate the sales necessary to earn an operating income of $50,000, we use the formula: 
Operating Income = (Unit Contribution Margin x Units sold) - Fixed Costs
$50,000 = ($50 x Units sold) - $450,000
$50 x Units sold = $500,000
Units sold = 10,000. Therefore, the answer is A, True.

If Fixed Costs Are $450,000 and the Unit Contribution Margin