Question

In 2019, X Company sold 6,500 units of its only product. Total revenue was $1,699,100, total variable costs were $625,300, and total fixed costs were $635,000. In 2020, there are only two expected changes: variable costs will decrease by $3.60 per unit, and fixed costs will decrease by $48,600. How many units must X Company sell in 2020 in order to earn $34,000?

Answer 1

Units to be sold = 3675 units or 3675.36

Working

	2019 data	Expected in next year
Variable cost	$    625,300.00
Units	6500
Variable cost per unit	$              96.20	$                92.60
Sales price per unit (1699100/6500)	$            261.40	$              261.40
Fixed cost	$    635,000.00	$      586,400.00

.

A	Sale Price per unit	$                261.40
B	Variable Cost per Unit	$                  92.60
C=A x B	Unit Contribution	$                168.80
D	Total Fixed cost +Desired income [586400+34000)	$       620,400.00
E=D/C	Units to be sold	3,675.36