Question 11 3.333 pts Assume that fixed costs are $700,000, the unit selling pri

Question

Question 11 3.333 pts Assume that fixed costs are $700,000, the unit selling price is $75, and the unit variable costs are $25, what is the amount of sales in units to realize an operating income of $300,000? 21,000 O 20,000 o 13,462 O None of the above answers are correct. Question 12 3.333 pts Assume that fixed costs are $700,000, the unit selling price is $75, and the unit variable costs are $25, what is the amount of sales in units required to break even if the fixed costs are reduced by $100,000? O 14,000 O 12.000 10,000 O None of the above answers are correct.

Explanation / Answer

Contribution margin=Sales-Variable costs

=(75-25)=$50 per unit

1.Target Contribution margin=Fixed cost+Target profits

=(700,000+300,000)=$1,000,000

Hence units to be sold=(1,000,000/50)=20000 units

2.Breakeven sales=Fixed cost/Contribution margin

=(700,000-100,000)/50=12000 units.

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