Snower Corporation sells product G for $150 per unit, the variable cost per unit is $105, and the fixed costs are $720,000.What is the sales (in dollars) required to realize operating income of $40,000?

Question

Quizplus · Accepted Answer

To achieve an operating income of $40,000 with a fixed cost of $720,000, the total contribution margin needed is $760,000 ($720,000 + $40,000). The contribution margin per unit is $45 ($150 - $105). Therefore, the required sales in dollars is $760,000 divided by $45 per unit, multiplied by the sales price of $150 per unit, which equals $2,533,333.

Snower Corporation Sells Product G for $150 Per Unit, the Variable