Co. Inc. is looking to achieve a net income of 15 percent of sales. Here’s the f

Question

Co. Inc. is looking to achieve a net income of 15 percent of sales. Here’s the firm’s profile: Unit sales price is $10; variable cost per unit is $6; total fixed costs are $40,000. What is the level of sales in units required to achieve a net income of 15 percent of sales?

A)

12,000 units

B)

21,000 units

C)

16,000 units

D)

20,000 units

Co. Inc. is looking to achieve a net income of 15 percent of sales. Here’s the firm’s profile: Unit sales price is $10; variable cost per unit is $6; total fixed costs are $40,000. What is the level of sales in units required to achieve a net income of 15 percent of sales?

A)

12,000 units

B)

21,000 units

C)

16,000 units

D)

20,000 units

Explanation / Answer

Selling Price 10 Variable Cost 6 Contribution per unit 4 Net Income = 4X-40000 4X-40000= .15X*10 X = 40000/2.5 X = 16000 units The correct answer is C) 16000 units

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