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Selling price per unit (package of 2 CDs)...................................... $20.00 Variable costs per unit: Direct material............................................................................................................... $4.00 Direct labor...................................................................................................................... $5.00 Artist's royalties.............................................................................................................. $3.50 Manufacturing overhead.......................................................................................... $3.00
Selling price per unit (package of 2 CDs)...................................... | $20.00 |
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Variable costs per unit: | |
Direct material............................................................................................................... | $4.00 |
Direct labor...................................................................................................................... | $5.00 |
Artist's royalties.............................................................................................................. | $3.50 |
Manufacturing overhead.......................................................................................... | $3.00 |
Selling expenses............................................................................................................ | $1.00 |
Total variable costs per unit............................................................ | $16.50 |
Annual fixed costs: | |
Manufacturing overhead.......................................................................................... | $180,000 |
Selling and administrative....................................................................................... | $220,000 |
Total fixed costs................................................................................ | $400,000 |
Forecasted annual sales volume (120,000 units)......................... | $2,400,000 |
How many units would ABC Inc. have to sell in order to earn operating income of $260,000?
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