A total of 30,000 units were sold last year. The contribution margin per unit was $2, and fixed expenses totaled $20,000 for the year. This year fixed expenses are expected to increase to $26,000, but the contribution margin per unit will remain unchanged at $2. How many units must be sold this year to earn the same profit as was earned last year?

Question

Quizplus · Accepted Answer

Last year's profit was (30,000 units * $2) - $20,000 = $40,000. To earn the same profit this year with $26,000 fixed expenses, solve for units: (Units * $2) - $26,000 = $40,000. Units = 33,000.

A Total of 30,000 Units Were Sold Last Year