In 2019, X Company sold 6,250 units of its only product. Total revenue was $1,608,750, total variable costs were $660,000, and total fixed costs were $642,000. In 2020, there are only two expected changes: variable costs will increase by $4.90 per unit, and fixed costs will decrease by $49,800. How many units must X Company sell in 2020 in order to earn $34,000?
in 2019
selling price per unit = 1608750 / 6250 = 257.4
variable cost pert unit = 660000 / 6250 = 105.6
fixed cost = 642000
in 2020
selling price = 257.4 per unit
variable cost per unit = 105.6 +4.9 = 110.5
fixed cost = 642000 - 49800 = 592200
contribution per unit = selling price per unit - variable cost per unit
= 257.4 - 110.5
= 146.9
required units to earn profit 34000 = ( fixed cost + profit ) / contribution per unit
= ( 592200+34000 ) / 146.9
= 4262.76 units
In 2019, X Company sold 6,250 units of its only product. Total revenue was $1,608,750, total...
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