Piper Technology's fixed costs are $1,500,000, the unit selling price is $250, and the unit variable costs are $130. The amount of sales required to realize an operating income of $200,000 is

Question

Quizplus · Accepted Answer

To find the sales required to achieve a specific operating income, we use the formula: Sales = (Fixed Costs + Desired Operating Income) / (Selling Price per Unit - Variable Cost per Unit). Plugging in the given values: Sales = ($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