A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $105. The new production line would manufacture up to 825,000 units at a variable cost of $64 per unit. Fixed costs would be $1,515,000. Variable selling and administration expenses would amount to $18. Determine the units needed to earn operating income of $4,000,000.

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To find the units needed to earn an operating income of $4,000,000, we use the formula for calculating the break-even point in units, but adjust it to include the desired profit:$$ \text{Units} = \frac{\text{Fixed Costs} + \text{Desired Profit}}{\text{Selling Price per Unit} - \text{Variable Cost per Unit} - \text{Variable Selling and Admin Expenses per Unit}} $$Given:- Fixed Costs = $1,515,000- Desired Profit = $4,000,000- Selling Price per Unit = $105- Variable Cost per Unit = $64- Variable Selling and Admin Expenses per Unit = $18$$ \text{Units} = \frac{1,515,000 + 4,000,000}{105 - 64 - 18} $$$$ \text{Units} = \frac{5,515,000}{23} $$$$ \text{Units} = 239,782.61 $$Rounding to the nearest whole number, we get 239,783 units.

A Manufacturing Company Is Studying the Feasibility of Producing a New