To determine the number of units that must be sold to earn a target operating income, one can use the equation for operating income and replace the operating income term with the target operating income.

Question

Quizplus · Accepted Answer

This is true. The equation for operating income is: Operating Income = (Sales - Variable Expenses) - Fixed Expenses. If we want to calculate the number of units that must be sold to earn a target operating income, we can replace the operating income term in this equation with the target operating income, and then solve for the sales volume (in units).

To Determine the Number of Units That Must Be Sold