Zeus,Inc.produces a product that has a variable cost of $9.50 per unit.The company's fixed costs are $40,000.The product sells for $12.00 a unit and the company desires to earn a $20,000 profit.What is the volume of sales in units required to achieve the target profit? (Do not round intermediate calculations.)
A) 24,000 units
B) 16,000 units
C) 17,000 units
D) 4,000 units

Question

Quizplus · Accepted Answer

The correct answer is A.The contribution margin per unit is $12.00 - $9.50 = $2.50. The target profit is $20,000. So, the volume of sales in units required to achieve the target profit is $20,000 / $2.50 = 8,000 units.

Zeus,IncProduces a Product That Has a Variable Cost of $9