Martin Enterprises has a predicted operating income of $110,000. Its total variable expenses are $35,000 and its total fixed expenses are $16,000. The unit contribution margin for the company's sole product is $11. The number of units that Martin Enterprises needs to sell to achieve the predicted operating income would be

Question

Quizplus · Accepted Answer

Using the formula:

Operating income = (Unit contribution margin × Q) - Fixed expenses

Where Q is the quantity of units sold, we can rearrange the formula to solve for Q:

Q = (Operating income + Fixed expenses) / Unit contribution margin

Plugging in the values given:

Q = ($110,000 + $16,000) / $11
Q = $126,000 / $11
Q = 11,454.54

Therefore, Martin Enterprises needs to sell 11,455 units to achieve the predicted operating income.

Martin Enterprises Has a Predicted Operating Income of $110,000