If the fixed cost is $10000, the target operating income is $8000 and the contribution margin per unit is $900, then required units to be sold will be ____________?
Correct answer: C. 20 units
- A. 45 units
- B. 30 units
- C. 20 units
- D. 52 units
Explanation
Required units equal (fixed cost + target operating income) ÷ contribution margin per unit: ($10,000 + $8,000) ÷ $900 = 20 units. This covers both the fixed cost and the desired income.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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