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1 June, 19:49

Ocean City Kite Company sells kites for $11.50 per kite. In FY 2019, total fixed costs are expected to be $250,000 and variable costs are estimated at $3.00 a unit. Ocean City Kite Company wants to have a FY 2019 operating income of $90,000. Use this information to determine the number of units of kites that Ocean City Kite Company must sell in FY 2019 to meet this goal. (Round your answer to a whole number)

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  1. 1 June, 22:28
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    40,000 kits

    Explanation:

    The computation is shown below:

    Number of kits required to be sold to meet the goal = Total Contribution Margin Required : Contribution Margin per Unit

    where,

    Total contribution margin required is

    = Total fixed cost + operating income

    = $250,000 + $90,000

    = $340,000

    And, the

    Contribution Margin per Unit = Selling Price per Unit - Variable Cost per unit

    = $11.50 - $3

    = $8.50

    So, the number of kits required is

    = $340,000 : $8.50

    = 40,000 kits
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