Assume an organization must invest $700,000 in fixed costs to produce a product that sells for $75 and requires $40 in variable costs to produce one unit. How many units of output must be sold to earn a $50,000 profit?

Question

Quizplus · Accepted Answer

To find the number of units needed to achieve a $50,000 profit, use the formula: (Fixed Costs + Desired Profit) / (Selling Price - Variable Cost per Unit). Plugging in the values: ($700,000 + $50,000) / ($75 - $40) = 21,428 units.

Assume an Organization Must Invest $700,000 in Fixed Costs to Produce