Martin Enterprises has a predicted operating income of $100,000. Its total variable expenses are $45,000 and its total fixed expenses have doubled from $23,000 to $46,000. The unit contribution margin for the company's sole product is $15. The number of units that Martin Enterprises needs to sell to achieve the predicted operating income would be

Question

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To achieve the predicted operating income, we first calculate the total expenses and then use the contribution margin to find the required units. Total expenses are $45,000 (variable) + $46,000 (fixed) = $91,000. To achieve a $100,000 operating income, total revenue needs to be $91,000 (expenses) + $100,000 (desired income) = $191,000. With a unit contribution margin of $15, the number of units needed is $191,000 / $15 = 12,734. However, since the question asks for the additional units needed beyond the break-even point, we subtract the break-even units from the total units. Break-even point in units is total fixed expenses / unit contribution margin = $46,000 / $15 = 3,067 units (rounded). Therefore, additional units needed = 12,734 - 3,067 = 9,667 units, which is not an option, indicating a need to re-evaluate the calculation or the interpretation of the question. The correct approach is direct calculation without subtracting the break-even units, leading to the answer of 12,734 units directly needed to achieve the operating income, which aligns with option C, indicating a mistake in my initial explanation. The correct answer should be directly calculated based on the total revenue needed divided by the contribution margin per unit.

Martin Enterprises Has a Predicted Operating Income of $100,000