If fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, what is the amount of sales required to realize an operating income of $200,000?
A) 9,231 units
B) 12,000 units
C) 10,769 units
D) 5,833 units

Question

Quizplus · Accepted Answer

First, calculate the contribution margin per unit:

Unit Selling Price - Unit Variable Cost = Contribution Margin per Unit 
$240 - $110 = $130

Next, calculate the number of units required to cover the fixed costs and achieve the desired operating income:

[($1,200,000 + $200,000) ÷ $130] = 10,769 units

If Fixed Costs Are $1,200,000, the Unit Selling Price Is