If the selling price per unit of a product is $50, variable costs per unit are $40, and total fixed costs are $50,000, a company must sell 6,000 units to make a target operating income of $10,000.

Question

Quizplus · Accepted Answer

To achieve a target operating income of $10,000, the company needs to cover both fixed costs and the desired income. The contribution margin per unit is $10 ($50 - $40). To cover $60,000 ($50,000 fixed costs + $10,000 target income), the company must sell 6,000 units ($60,000 / $10 per unit).

If the Selling Price Per Unit of a Product Is