If fixed costs are $700,000 and the unit contribution margin is $17, what amount of units must be sold in order to realize an operating income of $100,000?

47059

To determine the number of units that must be sold in order to achieve an operating income of $100,000, we can use the following formula:

(Number of units sold x Contribution margin per unit) - Fixed costs = Operating income

We are given that the fixed costs are $700,000 and the unit contribution margin is $17. Let's substitute these values into the formula:

(Number of units sold x $17) - $700,000 = $100,000

Now, let's solve for the number of units sold:

(Number of units sold x $17) = $100,000 + $700,000

(Number of units sold x $17) = $800,000

Number of units sold = $800,000 / $17

Number of units sold ≈ 47,058

Therefore, approximately 47,058 units must be sold in order to realize an operating income of $100,000.

To determine the number of units that must be sold in order to achieve a specific operating income, you can use the following formula:

Number of units to be sold = (Fixed costs + Target operating income) / Unit contribution margin

Given the information provided:

Fixed costs = $700,000
Unit contribution margin = $17
Target operating income = $100,000

Let's substitute these values into the formula:

Number of units to be sold = ($700,000 + $100,000) / $17

Number of units to be sold = $800,000 / $17

Number of units to be sold ≈ 47,058

Therefore, approximately 47,058 units must be sold in order to achieve an operating income of $100,000.

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