Question
Ipek Inc. is facing a problem with their 4th Quarter absorption costing net operating income on December 25th. Their net operating income target is $3,000,000
Ipek Inc. is facing a problem with their 4th Quarter absorption costing net operating income on December 25th. Their net operating income target is $3,000,000 and the data so far is as follows :Sales Revenue : $25,000,000 ($500 per unit)Variable Cost of Goods Sold : $10,000,000 ($200 per unit)Fixed Overhead : $13,000,000FIxed Selling and Adminstrative Expenses : $1,000,000Variable Selling and Adminstrative Expenses : 4% Commission on SalesIpek has a policy of having zero inventories on hand at end of each quarter. No further sales are possible during the year and all of the units produced so far have been sold. The CEO is planning to produce items for inventory to meet the net operating income target.Question : How many units need to be produced for inventory to meet the net operating income target if sales commission is left unchanged at 4%?A) 4,054 B) 30,000 C) 10,000 D) 15,000 E)
THE ANSWER IS NOT 10,000. Please give detailed explaination. Thanks
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