Anderson Corporation sells picture calendars for $10 each. The fixed costs of production are $300,000, and the variable costs are 60% of the selling price. The company desires to make a profit of $120,000. How many calendars must it sell?

Question

Quizplus · Accepted Answer

To find the number of calendars needed to be sold, we use the formula:  Profit = (Selling Price - Variable Cost) * Quantity - Fixed Costs.  Variable Cost = 60% of $10 = $6.  Profit = $120,000, Selling Price = $10, Fixed Costs = $300,000.  $120,000 = ($10 - $6) * Quantity - $300,000.  $120,000 + $300,000 = $4 * Quantity.  $420,000 = $4 * Quantity.  Quantity = $420,000 / $4 = 105,000.

Anderson Corporation Sells Picture Calendars for $10 Each