Question

NYC Inc. sells its product for $30 per unit and variable costs are $16 per unit. Its fixed costs are $122,400. Calculate the required sales in units to achieve its target operating income of 11% of total costs. (Round answer to 0 decimal places, e.g. 125.)

(it is very important that this is correct)

thank you!

Answer 1

answer)11100 units to be sold to achieve 11% profit on total costs.

calculation:-

let 'x' number of units to be sold to achieve a profit of 11% on total costs,then at this level of sales

total costs=fixed costs +total variable costs=$122400+x*$16,

profit=sales-total costs,profit=x*$30-($122400+x*$16)=$30x-$122400-$16x=$14x-$122400

11%*($122400+x*$16)=$14x-$122400 and ($13464+$1.76x)=$14x-$122400 and

$13464+$122400=$14x-$1.76x and $12.24x=$135864 and x=$135864/$12.24=11100 units

when sold 11100 units,then

11100x$30-11100x$16-$122400=$33000(sales-variable costs-fixed costs=profit)

11%of total costs=11%*($177600+$122400)=$300000x11%=$33000.