Answer the following questions using the information below:
Holly's Ham, Inc. sells hams during the major holiday seasons. During the current year 11,000 hams were sold resulting in $220,000 of sales revenue, $55,000 of variable costs, and $24,000 of fixed costs.
-The number of hams that must be sold to achieve $75,000 of operating income is:
A)6,600 hams
B)7,500 hams
C)8,400 hams
D)None of these answers are correct.

Question

Quizplus · Accepted Answer

To achieve $75,000 of operating income, the company must cover its variable and fixed costs and earn $75,000. The total costs are $55,000 + $24,000 = $79,000. To cover the costs and earn $75,000, the company must earn a total of $79,000 + $75,000 = $154,000. Since each ham sells for $220,000 / 11,000 = $20, the company must sell 154,000 / 20 = 7,700 hams.

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