Chelsea Company has sales of $400,000,variable costs of $10 per unit,fixed costs of $100,000,and a target profit of $60,000.How many units were sold?

Question

Quizplus · Accepted Answer

To find the number of units sold to achieve a target profit, we use the formula: (Sales - Variable Costs - Fixed Costs = Target Profit). However, we need to express sales and variable costs in terms of units. Let's denote the selling price per unit as P and the number of units sold as Q. We are not given P directly, but we can express the total sales as P*Q = $400,000. We know the variable cost per unit is $10, and the fixed costs are $100,000. The target profit is $60,000. The equation becomes: $400,000 - $10Q - $100,000 = $60,000. Simplifying, we get $300,000 = $10Q + $60,000, and further simplification gives $240,000 = $10Q. Dividing both sides by $10 gives Q = 24,000 units.

Chelsea Company Has Sales of $400,000,variable Costs of $10 Per