The sales price is $60 per unit, variable costs are $25 per unit, and fixed costs are $175 000. What level of sales, in units, would achieve a target profit of $350 000?

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Quizplus · Accepted Answer

To achieve a target profit, we first calculate the contribution margin per unit, which is the sales price minus the variable cost: $60 - $25 = $35. Then, to find the number of units needed to achieve a target profit, we divide the total of fixed costs and target profit by the contribution margin per unit: ($175,000 + $350,000) / $35 = 15,000 units.

The Sales Price Is $60 Per Unit, Variable Costs Are