Dakota Company provides the following information about its single product:
$$\begin{array} { | l | r | }
\hline \text { Targeted operating income } & \$ 40,000 \
\hline \text { Selling price per unit } & \$ 3.50 \
\hline \text { Variable cost per unit } & \$ 1.05 \
\hline \text { Total fixed costs } & \$ 90,000 \
\hline
\end{array}$$ How many units must be sold to earn the targeted operating income?
A) 37,143
B) 123,810
C) 53,061
D) 36,735

Question

Dakota Company provides the following information about its single product:
$$\begin{array} { | l | r | } 
\hline \text { Targeted operating income } & \$ 40,000 \
\hline \text { Selling price per unit } & \$ 3.50 \
\hline \text { Variable cost per unit } & \$ 1.05 \
\hline \text { Total fixed costs } & \$ 90,000 \
\hline
\end{array}$$ How many units must be sold to earn the targeted operating income?
A) 37,143
B) 123,810
C) 53,061
D) 36,735

Quizplus · Accepted Answer

To find the number of units needed to achieve the targeted operating income, use the formula: Units = (Fixed Costs + Targeted Operating Income) / (Selling Price per Unit - Variable Cost per Unit). Plugging in the values: Units = ($90,000 + $40,000) / ($3.50 - $1.05) = 53,061 units.

Dakota Company Provides the Following Information About Its Single Product