Question

Helium Company has the following information available:

Selling price per unit $5.00
Variable cost per unit $3.50
Total fixed costs $90,000.00
Targeted net income $30,000.00

How many units must be sold to achieve the targeted net income?

80,000 units

27,000 units

45,000 units

10,000 units

*Please show work

Answer 1

Answer:

Option 1st is correct.i.e 80,000 units.

Calculation of no. units sold to Target profit of $30,000.

No. of units to be sold to achieve the targeted net income= (Fixed cost +Targeted net income) /Contribution per unit

Contribution per unit = selling price – Variable cost

= $5.00 - $3.50 = $1.50

No. of units to be sold to attain required profit = ($90,000 + $30,000) / $1.50

= $120,000 / $1.50

= 80,000 Units