Question

Betsy Company sells a single product.

They want to make a profit of $60,666

Unit Variable costs = $13

Unit selling price is = $22

Fixed costs = $18,082

How many units do they need to sell to make the desired profit?

Round your units UP to the nearest whole number.

Answer 1

Answer:

Computation of number of units to sale to make profit of $ 60,666

Required Sales unit = (Fixed cost + Desired profit) / Contribution margin per unit

= ( $ 18,082 + $ 60,666 ) / $ 9

= 8,750 units ( Rounded off to nearest whole number as per question requirement)

Thus, Betsy company needs to sale 8,750 units in order to make profit of $ 60,666

Working note:

Calculation of contribution margin per unit:

Contribution margin per unit = Selling price per unit - Variable cost per unit

=$ 22 - $ 13

= $ 9

Note:

We can prove at 8,750 unit profit will be $ 60,666

Profit = Total contribution margin - Fixed cost

= $ 78,750 - $ 18,082

= $ 60,668 ( answer is nearest to $ 60,666 & vary due to rounding off number of units to nearest whole number)

Total contribution margin = Number of units * Contribution margin per unit

= 8,750 * $ 9

= $ 78,750