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
B) 16,000
C) 17,000
D) 4,000

Question

Quizplus · Accepted Answer

Explanation:Contribution Margin per unit = Selling Price per unit - Variable Cost per unit= $12.00 - $9.50= $2.50Target Profit = $20,000Volume of Sales in units required to achieve the target profit = Target Profit / Contribution Margin per unit= $20,000 / $2.50= 8,000 units

Zeus, Inc Produces a Product That Has a Variable Cost of of $9.50