Runnymeade Products makes a racing bicycle tire. Cost and volume data are below. If management wants to earn $9,000 of operating income, how many units must be sold? (Please round to nearest whole number.)

Question

Runnymeade Products makes a racing bicycle tire. Cost and volume data are below.  If management wants to earn $9,000 of operating income, how many units must be sold? (Please round to nearest whole number.)

Quizplus · Accepted Answer

To determine the number of units needed to be sold to earn $9,000 of operating income, we need to use the following formula:

($9,000 + Fixed Costs) ÷ (Price per unit – Variable Cost per unit) = Number of units

Using the data from the table, we can plug in the values:

($9,000 + $16,000) ÷ ($80 – $40) = 10,571

Therefore, the best choice is B.

Runnymeade Products Makes a Racing Bicycle Tire