A company has a fixed cost of $60,000 and a contribution margin of $15 per unit.

A company has a fixed cost of $60,000 and a contribution margin of $15 per unit. How many units must be sold to achieve a profit of $24,000?

A company has a fixed cost of $60,000 and a contribution margin of $15 per unit. How many units must be sold to achieve a profit of $24,000?

Step 1: Identify the fixed costs, which are $60,000.
Step 2: Identify the target profit, which is $24,000.
Step 3: Identify the contribution margin per unit, which is $15.
Step 4: Add the fixed costs and the target profit together: $60,000 + $24,000 = $84,000.
Step 5: Divide the total from Step 4 by the contribution margin per unit: $84,000 / $15.
Step 6: Calculate the result of the division: $84,000 / $15 = 5,600 units.
Step 7: Conclude that the company must sell 5,600 units to achieve a profit of $24,000.

Break-even analysis – Understanding how fixed costs, variable costs, and contribution margin relate to the number of units needed to achieve a specific profit.
Contribution margin – The amount each unit contributes to covering fixed costs and generating profit.
Profit calculation – Calculating the number of units needed to reach a desired profit level based on fixed costs and contribution margin.