A company has fixed costs of $320,000 and a contribution margin per unit of $15. If the firm wants to earn a target $40,000 pretax income, how many units must be sold (rounded to the nearest whole unit)?
A) 21,333.
B) 2,667.
C) 20,000.
D) 18,666.
E) 24,000.

Question

Quizplus · Accepted Answer

To find the number of units needed to achieve the target income, use the formula: (Fixed Costs + Target Income) / Contribution Margin per Unit. Here, it is ($320,000 + $40,000) / $15 = 24,000 units.

A Company Has Fixed Costs of $320,000 and a Contribution