Question

Ivanhoe Corporation has fixed costs of $507,200. It has a unit selling price of $9.00, unit variable cost of $7.35, and a target net income of $1,552,000.
Required:
Compute the required sales in units to achieve its target net income.

Answer 1

Answer:

Break-even point in units= 1,248,000

Explanation:

Giving the following information:

Unitary contribution margin= 9 - 7.35= $1.65

Fixed costs= $507,200

Desired profit= $1,552,000

To calculate the number of units to be sold, we need to use the following formula:

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (507,200 + 1,552,000) / 1.65

Break-even point in units= 1,248,000