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17 November, 01:30

A firm sells a product for a per unit price of $6,000. Variable costs per unit are $4,800. Total fixed costs are $14,000. How many unit sales are required to earn a profit of $49,000?

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  1. 17 November, 03:30
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    52.5 units

    Explanation:

    Contribution margin per unit:

    = (Sales price per unit - variable cost per unit)

    = $6,000 - $4,800

    = $1,200

    Unit sales to attain target profit:

    = (Fixed expense + Target profit) : Contribution margin per unit

    = ($14,000 + $49,000) : $1,200

    = 52.5 units

    Hence, 52.5 units are required to earn a profit of $49,000.
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