Firebird Ltd. sells packaged birdseed for $6.00 per package. Variable product costs are $3.00 per package. Fixed costs are $12,000 per period. How many packages must Firebird sell to earn a target operating income of $7,900?
A) 4,000 packages
B) 2,633 packages
C) 6,633 packages
D) 3,317 packages

Question

Quizplus · Accepted Answer

Correct. Quantity required = (fixed costs + target OpInc) / CM per unit
Q = ($12,000 + $7,900) / ($6.00 - $3.00) = 6,633 units.