The president of DynaMark will not receive a bonus next year unless the company's profits are at least $435,000.DynaMark sells a single product at a price of $27 per unit.If variable costs are $12 per unit and fixed costs total $150,000, what amount of unit sales must DynaMark generate in order for the president to receive a bonus?

Question

Quizplus · Accepted Answer

In order to calculate the number of units DynaMark needs to sell, we can use the following formula:

Profit = (Price per unit * Number of units sold) - (Variable cost per unit * Number of units sold) - Fixed costs

We can rearrange this formula to solve for the number of units:

Number of units sold = (Profit + Fixed costs) / (Price per unit - Variable cost per unit)

We know that the president will only receive a bonus if the company's profits are at least $435,000. We can plug this number into the formula and solve for the number of units:

Number of units sold = ($435,000 + $150,000) / ($27 - $12)
Number of units sold = $585,000 / $15
Number of units sold = 39,000 units

Therefore, DynaMark must sell 39,000 units in order for the president to receive a bonus. The correct answer is B).

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