Sky High sells helicopters.During the current year,100 helicopters were sold resulting in $820,000 of sales revenue,$250,000 of variable costs,and $342,000 of fixed costs.The number of helicopters that must be sold to achieve $300,000 of operating income is ________.
A) 113 units
B) 102 units
C) 96 units
D) 100 units

Question

Quizplus · Accepted Answer

First, we need to calculate the contribution margin per unit:
Contribution Margin per unit = Sales Price per unit - Variable Cost per unit
Contribution Margin per unit = ($820,000/100) - ($250,000/100)
Contribution Margin per unit = $5,700

Next, we can use the following formula to calculate the breakeven point in units:
Breakeven Point in Units = Fixed Costs / Contribution Margin per unit
Breakeven Point in Units = $342,000 / $5,700
Breakeven Point in Units = 60 units

To calculate the number of helicopters needed to achieve $300,000 of operating income, we can use the following formula:
Operating Income = (Number of Units Sold x Contribution Margin per unit) - Fixed Costs
$300,000 = (Number of Units Sold x $5,700) - $342,000
Number of Units Sold = 112.28

Therefore, the number of helicopters that must be sold to achieve $300,000 of operating income is approximately 113 units. The best choice is A.

Sky High Sells Helicopters