My Learning Cart
?
Categories
Account

A company has fixed costs of $20,000 and a contribution margin of $10 per unit.

₹0.0
Login to Download
  • 📥 Instant PDF Download
  • ♾ Lifetime Access
  • 🛡 Secure & Original Content

What’s inside this PDF?

Question: A company has fixed costs of $20,000 and a contribution margin of $10 per unit. How many units must be sold to achieve a profit of $10,000?

Options:

  1. 2,000 units
  2. 3,000 units
  3. 4,000 units
  4. 5,000 units

Correct Answer: 4,000 units

Solution: 

Required units = (Fixed Costs + Target Profit) / Contribution Margin = ($20,000 + $10,000) / $10 = 3,000 units.

A company has fixed costs of $20,000 and a contribution margin of $10 per unit.

Practice Questions

Q1
A company has fixed costs of $20,000 and a contribution margin of $10 per unit. How many units must be sold to achieve a profit of $10,000?
  1. 2,000 units
  2. 3,000 units
  3. 4,000 units
  4. 5,000 units

Questions & Step-by-Step Solutions

A company has fixed costs of $20,000 and a contribution margin of $10 per unit. How many units must be sold to achieve a profit of $10,000?
  • Step 1: Identify the fixed costs, which are $20,000.
  • Step 2: Identify the target profit, which is $10,000.
  • Step 3: Identify the contribution margin per unit, which is $10.
  • Step 4: Add the fixed costs and the target profit together: $20,000 + $10,000 = $30,000.
  • Step 5: Divide the total from Step 4 by the contribution margin: $30,000 / $10 = 3,000.
  • Step 6: The result from Step 5 tells you the number of units that must be sold to achieve the target profit, which is 3,000 units.
  • Break-even Analysis – This concept involves calculating the number of units that must be sold to cover fixed costs and achieve a desired profit.
  • Contribution Margin – The contribution margin is the amount each unit contributes to covering fixed costs and generating profit.
Soulshift Feedback ×

On a scale of 0–10, how likely are you to recommend The Soulshift Academy?

Not likely Very likely
Home Practice Performance eBooks