Racer Industries has fixed costs of $900,000. Selling price per unit is $250 and variable cost per unit is $130.
Required:
a. How many units must Racer sell in order to break even?
b. How many units must Racer sell in order to earn a profit of $480,000?
c. A new employee suggests that Racer Industries sponsor a company 10-K as a form of advertising. The cost to sponsor the event is $7,200. How many more units must be sold to cover this cost?

Question

Quizplus · Accepted Answer

The Answer of Racer Industries has fixed costs of $900,000. Selling price per unit is $250 and variable cost per unit is $130.
Required:
a. How many units must Racer sell in order to break even?
b. How many units must Racer sell in order to earn a profit of $480,000?
c. A new employee suggests that Racer Industries sponsor a company 10-K as a form of advertising. The cost to sponsor the event is $7,200. How many more units must be sold to cover this cost?

Racer Industries Has Fixed Costs of $900,000