If the unit sales price is $10 and variable costs are $6, how many units have...

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Question

If the unit sales price is $10 and variable costs are $6, how many units have...

If the unit sales price is $10 and variable costs are $6, how many units have to be sold to earn a profit of $2,400 if fixed costs equal $6,000?

Multiple Choice

6,600 units
600 units
2,100 units
1,500 units

business accounting

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Answer 1

Answer #1

Units needs to be sold to earn a profit of $2,400

Contribution margin = Fixed cost + Target profit

= $6,000 + $2,400

= $8,400

Contribution margin per unit = Sales price - variable cost

= $10 - $6

= $4

Units have to be sold = Contribution margin / Contribution margin per unit

= $8,400 / $4

= 2,100 units

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Answer 2

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