2. A venture capital investment group received a proposal from Wireless Solution
ID: 2648837 • Letter: 2
Question
2.
A venture capital investment group received a proposal from Wireless Solutions to produce a new smart phone. The variable cost per unit is estimated at $350, the sales price would be set at twice the VC/unit, fixed costs are estimated at $850,000, and the investors will put up the funds if the project is likely to have an operating income of $600,000 or more. What sales volume would be required in order to meet this profit goal?
a.
4,143 units
b.
4,750 units
c.
5,000 units
d.
5,250 units
e.
5,513 units
2.
A venture capital investment group received a proposal from Wireless Solutions to produce a new smart phone. The variable cost per unit is estimated at $350, the sales price would be set at twice the VC/unit, fixed costs are estimated at $850,000, and the investors will put up the funds if the project is likely to have an operating income of $600,000 or more. What sales volume would be required in order to meet this profit goal?
a.
4,143 units
b.
4,750 units
c.
5,000 units
d.
5,250 units
e.
5,513 units
Explanation / Answer
2 A venture capital investment group received a proposal from Wireless Solutions to produce a new smart phone. The variable cost per unit is estimated at $350, the sales price would be set at twice the VC/unit, fixed costs are estimated at $850,000, and the investors will put up the funds if the project is likely to have an operating income of $600,000 or more. What sales volume would be required in order to meet this profit goal?
Sales volume would be required in order to meet this profit goal = (fixed costs + Required operating income)/(Sale Price - Variable cost per unit)
Sales volume would be required in order to meet this profit goal = (850000+600000)/(350*2 - 350)
Sales volume would be required in order to meet this profit goal = 4143 Units
Answer
a.
4,143 units
a.
4,143 units
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