group of venture investors is considering putting money into Lemma Books, which wants to produce a new reader for electronic books.The variable cost per unit is estimated at $250, the sales price would be set at twice the VC/unit, fixed costs are estimated at $750,000, and the investors will put up the funds if the project is likely to have an operating income of $500,000 or more.What sales volume would be required in order to meet this profit goal?
A)4,513
B)4,750
C)5,000
D)5,250
E)5,513

Question

Quizplus · Accepted Answer

The formula for calculating the required sales volume to meet a profit goal is:
(Sales Price per unit - Variable Cost per unit) x Sales Volume - Fixed Costs = Operating Income

Plugging in the given values:
(2 x VC per unit = $500) - ($250) x Sales Volume - $750,000 = $500,000

Simplifying:
$500 x Sales Volume = $1,250,000
Sales Volume = 2,500 units

Therefore, the required sales volume to meet the profit goal is 5,000 units (since each unit represents 2 VC). The correct answer is C) 5,000.

Group of Venture Investors Is Considering Putting Money into Lemma