The following information pertains to the Flying Fig Corporation: How many units need to be sold in order to reach the target profit?

Question

The following information pertains to the Flying Fig Corporation:  How many units need to be sold in order to reach the target profit?

Quizplus · Accepted Answer

The question asks for the number of units needed to reach the target profit, which is $20,000. Using the formula: (unit price * units sold) - fixed costs = profit, we can solve for units sold as: 
(units sold) = (profit + fixed costs) / unit price 
Plugging in the values given in the question, we get: 
(units sold) = (20,000 + 40,000) / 15 
(units sold) = 4,000 
Therefore, the company needs to sell 4,000 units to break even. However, the question asks for the number of units needed to reach the target profit, so we need to add the 2,000 units necessary to reach the break-even point to the 1,333 units needed to reach the target profit. 
(units needed to reach target profit) = 2,000 + 1,333 
(units needed to reach target profit) = 3,333 
Therefore, the answer is B) 3333 units.

The Following Information Pertains to the Flying Fig Corporation