Nokia has recently released its new phone the Lumia 900. Nokia has determined th

Question

Nokia has recently released its new phone the Lumia 900. Nokia has determined
that their direct labor costs are $50 per unit. It will have direct materials costs of
approximately $200 per unit. The company has also incurred research and
development costs of approximately $100 million. And due to the extensive
marketing campaign, the company will have incurred advertising costs of
approximately $49 million. Nokia has no other costs associated with this line of
phones. Nokia is planning to sell the phone for $450 per unit. How many units of
Lumia 900 phones must Nokia sell to earn a $1 million profit?
A) 700,000 units
B) 750,000 units
C) 800,000 units
D) 825,000 units

Explanation / Answer

total fixed costs = 149 million = 149,000,000

let total number of phones to be sold = t

So,

1,000,000 = 450 x t - (250 x t + 149,000,000)

So, we have, t = 750,000 phones to be sold.

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