A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

Question

BlackTom AI · Accepted Answer

A product's contribution per unit is derived from the selling price and the contribution margin ratio. First, calculate the contribution per unit: selling price $20 times CM ratio 40% equals $8 per unit.

Next, determine the total contribution needed to achieve the desired profit after covering fixed costs. The target profit is $30,000 and fixed costs are $120,000, so total required contribution = 120,000 + 30,000 = 150,000.

Finally, find the number of units to sell by dividing the total required contribution by the contribution per unit: 150,000 ÷ 8 = 18,750 units.

In summary, the calculation steps are: CM per unit = 20 × 0.40 = 8; required contribution = 120,000 + 30,000 = 150,000; required units = 150,000 ÷ 8 = 18,750.

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000Numerical

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