Piper Technology's fixed costs are $1,500,000,the unit selling price is $250,and the unit variable costs are $130,what is the amount of sales required to realize an operating income of $200,000?
A) 14,167 units
B) 12,500 units
C) 16,000 units
D) 11,538 units

Question

Quizplus · Accepted Answer

To find the sales required to achieve a specific operating income, we can use the formula for the break-even point in units and adjust it for the desired profit. The formula is: (Fixed Costs + Desired Operating Income) / (Selling Price per Unit - Variable Cost per Unit). Plugging in the given values: ($1,500,000 + $200,000) / ($250 - $130) = $1,700,000 / $120 = 14,166.67 units. Since we can't sell a fraction of a unit, we round up to the nearest whole unit, resulting in 14,167 units.

Piper Technology's Fixed Costs Are $1,500,000,the Unit Selling Price Is