Back to Questions
SSC Financial and Cost Accounting P-1 QUESTION #6068
Question 1

Budgeted data for 6,000 units:

  • Variable manufacturing: $90,000
  • Variable selling: $6,000
  • Fixed manufacturing: $54,000
  • Fixed admin: $21,000

Selling price is $40 unit.  How many units must be sold to reach a target profit of $45,000?

  • 3,960
  • 4,125
  • 4,800
  • 5,000✔️
Correct Answer Explanation

1. Variable Cost per unit = ($90,000 + $6,000) / 6,000 = $16.
2. Contribution per unit = $40 - $16 = $24.
3. Total Fixed Costs = $54,000 + $21,000 = $75,000.
4. Required Units = (Fixed Costs + Target Profit) / Contribution = ($75,000 + $45,000) / $24 = 5,000 units.