A total of 30,000 units were sold last year.The contribution margin per unit was $2,and fixed expenses totaled $20,000 for the year.This year fixed expenses are expected to increase to $26,000,but the contribution margin per unit will remain unchanged at $2.How many units must be sold this year to earn the same profit as was earned last year?

Question

Quizplus · Accepted Answer

Profit last year = (Unit CM F1F1F1S1F1F1F10 Units sold)- Fixed expenses
= ($2 per unit F1F1F1S1F1F1F10 30,000 units)- $20,000
= $60,000 - $20,000
= $40,000
Unit sales to attain a target profit = (Target profit + Fixed expenses)F1F1F1S1F1F1F10 Unit CM
= ($40,000+ $26,000)F1F1F1S1F1F1F10 $2 per unit
= $66,000 F1F1F1S1F1F1F10 $2 per unit
= 33,000 units

A Total of 30,000 Units Were Sold Last Year