During the past year a company had total fixed costs of $700,000.Its product sold for $93 per unit.Variable costs during this time equaled $45 per unit.Next year the company is anticipating a 10% increase in total fixed costs and a $3 per unit decrease in variable costs but would like to maintain its current selling price per unit.How many units must the company sell next year to earn $1 million? (Round answer to complete units.)
A) 19,608
B) 34,706
C) 36,875
D) 20,833
E) 19,033

Question

Quizplus · Accepted Answer

New total fixed costs: $700,000 x 1.1 = $770,000
New variable costs per unit: $45 - $3 = $42
Units required = ($770,000 + $1,000,000)/($93 - $42) = 34,706 units

During the Past Year a Company Had Total Fixed Costs