Question

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?

Answer 1

Solution

Units to be sold = 4262.76 units or 4263 units approx

Working

	Current	Changed
Sales revenue	$ 1,608,750.00
Total Variable cost	$      660,000.00
Units	6250
Sales price	$              257.40
Variable cost per unit	$              105.60	$          110.50
Fixed cost	$      642,000.00	$ 592,200.00

.

A	Sale Price per unit	$                257.40
B	Variable Cost per Unit	$                110.50
C=A x B	Unit Contribution	$                146.90
D	Total Fixed cost + desired profit [592200+34000]	$       626,200.00
E=D/C	Units to be sold	4,262.76