Question

NYX Inc. sells its product for $28 per unit and variable costs are $13 per unit. Its fixed costs are $138,300. Calculate the required sales in units to achieve its target operating income of 9% of total costs. (Round answer to 0 decimal places, e.g. 125.)

please show all work

Answer 1

Here, we have Sales price=$28 per unit

Variable cost=$13 per unit.

So, contribution margin=$28-$13=$15 per unit.

Contribution margin ratio= contribution margin /sales

=$15/$28=0.5357

Now, Assume total cost=$x

So, Targeted profit=9% of x.

So, total sales=(100+9)%of x

So, required sales=fixed cost+targeted profit/contribution margin ratio

1.09x=$138300+0.09x/0.5357

or, 1.09x×0.5357=138300+0.09x

or, 0.8539x=138300+0.09x

or, 0.8539x-0.09x=138300

or, 0.7639x=138300

or, x=138300/0.7639

=$181044.639

So, required sale=109% of x

=109%*181044.39

=$197338.657.