Given a break-even point of 44,000 units and a contribution margin per unit of $4.80, the total number of units that must be sold to reach a net profit of $9,048 is
A) 45,885 units.
B) 44,000 units.
C) 1,885 units.
D) cannot be determined with the above information.

Question

Quizplus · Accepted Answer

The formula for calculating the total units required to achieve a target profit is:

(Unit Sales * Contribution Margin) - Fixed Costs = Target Profit

We know that the break-even point is 44,000 units, which means the total fixed costs are covered at this level of sales.

Let's assume x is the number of units required to achieve the target profit.

(4.80 * x) - Fixed Costs = 9,048
(4.80 * x) - (4.80 * 44,000) = 9,048

Solving for x, we get:
4.80x - 211,200 = 9,048
4.80x = 220,248
x = 45,885

Therefore, the total number of units that must be sold to reach a net profit of $9,048 is 45,885 units.

Given a Break-Even Point of 44,000 Units and a Contribution