During the past year a company had total fixed costs of $70,000. Its product sold for $9 per unit. Variable costs during this time equaled $5 per unit. Next year the company is anticipating a 4% increase in total fixed costs and a $1 per unit decrease in variable costs, but would like to maintain its current selling price per unit. How many units must the company sell next year to earn $1,000,000? (Round answer to complete units.)

Question

Quizplus · Accepted Answer

The correct answer is C.Explanation:The company's current profit is:$9 per unit x units sold - $5 per unit x units sold - $70,000 = $1,000,000$4 per unit x units sold - $70,000 = $1,000,000$4 per unit x units sold = $1,070,000units sold = $1,070,000 / $4 per unit = 267,500 unitsNext year, the company's profit will be:$9 per unit x units sold - $4 per unit x units sold - $72,800 = $1,000,000$5 per unit x units sold - $72,800 = $1,000,000$5 per unit x units sold = $1,072,800units sold = $1,072,800 / $5 per unit = 214,560 units

During the Past Year a Company Had Total Fixed Costs