Reference: 08-11
Hurst Co. manufactures and sells a single product. Price and cost data regarding this product are as follows: $$\begin{array} { | l | l | }
\hline \text { Selling price } & \$ 40 \text { per unit } \
\hline \text { Variable manufacturing costs } & \$ 20 \text { per unit } \
\hline \text { Variable selling \& admin. expenses } & \$ 6 \text { per unit } \
\hline \text { Fixed manufacturing overhead } & \$ 208,000 \text { per year } \
\hline \text { Fixed selling \& admin. expenses } & \$ 324,000 \text { per year } \
\hline
\end{array}$$
-How many units need to be sold to earn an annual net income equal to 10% of sales

Question

Reference: 08-11
Hurst Co. manufactures and sells a single product. Price and cost data regarding this product are as follows: $$\begin{array} { | l | l | } 
\hline \text { Selling price } & \$ 40 \text { per unit } \
\hline \text { Variable manufacturing costs } & \$ 20 \text { per unit } \
\hline \text { Variable selling \& admin. expenses } & \$ 6 \text { per unit } \
\hline \text { Fixed manufacturing overhead } & \$ 208,000 \text { per year } \
\hline \text { Fixed selling \& admin. expenses } & \$ 324,000 \text { per year } \
\hline
\end{array}$$
-How many units need to be sold to earn an annual net income equal to 10% of sales

Quizplus · Accepted Answer

To find the number of units needed to achieve a net income of 10% of sales, first calculate the contribution margin per unit: $40 - $20 - $6 = $14. Then, set up the equation for net income: $14x - $208,000 - $324,000 = 0.10($40x). Solving for x gives 53,200 units.

Reference: 08-11 Hurst Co -How Many Units Need to Be Sold to Earn an Price

Reference: 08-11
Hurst Co -How Many Units Need to Be Sold to Earn an Price