If the target operating income is $84000 and contribution margin per unit is $600, then number of units must be sold to earn targeted operating income, will be __________?
Correct answer: D. 140 units
- A. 100 units
- B. 110 units
- C. 120 units
- D. 140 units
Explanation
Required units are calculated as target operating income divided by contribution margin per unit when no fixed costs are provided: $84,000 ÷ $600 = 140 units. If fixed costs were intended, they would also need to be included in the numerator.
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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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