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Moon Company sells Product Q at $6 a unit. In 20XO fixed costs are expected to be $200,000 and variable costs are estimated at $4 a unit. How many units of Product Q must Moon sell to generate operating income of $40,000

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Answer:

Break-even point in units= 120,000

Explanation:

Giving the following information:

Selling price= $6

Unitary variable cost= $4

Fixed costs= $200,000

Desired profit= $40,000

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= (200,000 + 40,000) / (6 - 4)

Break-even point in units= 120,000

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