A product is priced to sell for $12 with average variable costs of $8.The company expects to earn a profit of $400,000 with its total fixed costs of $120,000.The minimum number of units that must be sold in order to reach this target return is:
A)400,000
B)130,000
C)120,000
D)80,000

Question

Quizplus · Accepted Answer

Explanation:Profit = (Selling Price - Average Variable Cost) * Number of Units Sold - Fixed Costs$400,000 = ($12 - $8) * Number of Units Sold - $120,000$400,000 = $4 * Number of Units Sold - $120,000$520,000 = $4 * Number of Units SoldNumber of Units Sold = 130,000

A Product Is Priced to Sell for $12 with Average