Hill & Scott Company sells a product for $20.Variable costs are $15 per unit, and total fixed costs are $7,000.How many units must be sold by Hill & Scott to earn a profit of $1,000?
A) 1,600 units
B) 1,400 units
C) 1,040 units
D) 62 units
E) 247 units

Question

Quizplus · Accepted Answer

Number of Units to Earn Target Income = (Total Fixed Cost + Target Income) / Contribution Margin per Unit
Unit Contribution Margin = Price - Unit Variable Cost = ($20 -$15) = $5
Number of Units to Earn Target Income = ($7,000 + $1000) / $5 = 1,600 units

Hill & Scott Company Sells a Product for $20