During the past year a company had total fixed costs of $70,000.Its product sold for $9 per unit.Variable costs during this time equaled $5 per unit.Next year the company is anticipating a 4% increase in total fixed costs and a $1 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) 119,200
B) 200,000
C) 214,560
D) 268,200
E) 18,200

Question

Quizplus · Accepted Answer

New total fixed costs: $70,000 x 1.04 = $72,800
New variable costs per unit: $5 - $1 = $4
Units required = ($72,800+ $1,000,000)/($9 - 4) = 214,560 units

During the Past Year a Company Had Total Fixed Costs