Retro Records wants to sell enough records to earn a profit of $150,000. If the unit selling price is $20, unit variable cost is $8, and total fixed costs are $180,000, how many records must Retro Records sell to earn the desired net income of $150,000?
A) 16,500 units
B) 27,500 units
C) 41,250 units
D) 50,200 units

Question

Quizplus · Accepted Answer

(Fixed Costs + Target Net Income) / Contribution margin per unit = Units to be sold to earn net income) = ($180,000 + $150,000) / ($20 - $8) = 27,500 units.

Retro Records Wants to Sell Enough Records to Earn a Profit