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The ABC Corporation is considering introducing a new product, which will require buying new equipment for...

The ABC Corporation is considering introducing a new product, which will require buying new equipment for a monthly payment of $5,000. Each unit produced can be sold for $20.00. ABC incurs a variable cost of $10.00 per unit. Suppose that ABC would like to realize a monthly profit of $50,000. How many units must they sell each month to realize this profit?

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Answer #1

Units to be sold= 5,500

Working

A Sale Price per unit $                   20.00
B Variable Cost per Unit $                   10.00
C=A - B Unit Contribution $                   10.00
D Total Fixed cost + Desired income (5000+50000) $           55,000.00
E=D/C Breakeven point in units                       5,500
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