Kress, Inc. wants to sell a sufficient quantity of products to earn a profit of $40,000. If the unit sales price is $10, unit variable cost is $8, and total fixed costs are $80,000, how many units must be sold to earn income of $40,000?
A) 60,000 units
B) 40,000 units
C) 15,000 units
D) 600,000 units

Question

Quizplus · Accepted Answer

To find the number of units needed to earn a profit of $40,000, use the formula: (Fixed Costs + Desired Profit) / (Sales Price per Unit - Variable Cost per Unit). Here, (80,000 + 40,000) / (10 - 8) = 60,000 units.