Barbara's Boutique wants to know what it takes to have $20,000 in operating income.If her selling price is $20, variable cost is $8, and fixed costs total $40,000, how many units must she sell to reach her goal?

Question

Quizplus · Accepted Answer

To calculate the number of units Barbara's Boutique needs to sell, we can use the following formula:

Operating Income = (Selling Price - Variable Cost) x Units - Fixed Costs

Since we know that Barbara wants to have $20,000 in operating income, we can plug that in:

$20,000 = ($20 - $8) x Units - $40,000

We can simplify this to:

$60,000 = $12 x Units

And then solve for Units:

Units = $60,000 / $12 = 5,000 units

Therefore, the answer is choice C: 5,000 units.

Barbara's Boutique Wants to Know What It Takes to Have