Hirt Corporation sells its product for $12 per unit.Next year,fixed expenses are expected to be $400,000 and variable expenses are expected to be $8 per unit.How many units must the company sell to generate net operating income of $80,000?

Question

Quizplus · Accepted Answer

Unit CM = Selling price per unit - Variable expenses per unit
= $12 per unit - $8 per unit = $4 per unit
Unit sales to attain a target profit = (Target profit + Fixed expenses)F1F1F1S1F1F1F10 Unit CM
= ($80,000 + $400,000)F1F1F1S1F1F1F10 $4 per unit
=120,000 units

Hirt Corporation Sells Its Product for $12 Per Unit