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.