Carolina Timber, Inc. produces flooring material. The monthly fixed costs are $10,000 per month. The unit sales price is $75, and variable cost per unit is $35. How many units should Carolina sell in order to earn $10,000 as operating income? Answer: Required sales in units = (Fixed costs + Target profit) / Contribution margin per unit Unit contribution margin = Net sales revenue per unit - Variable costs per unit Unit contribution margin = $75 - $35 = $40     550 Units     500 units     1200 units     400 units

FINANCIAL ACCOUNTING
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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Carolina Timber, Inc. produces flooring material. The monthly fixed costs are $10,000 per month. The unit sales price is $75, and variable cost per unit is $35. How many units should Carolina sell in order to earn $10,000 as operating income?

Answer: Required sales in units = (Fixed costs + Target profit) / Contribution margin per unit

Unit contribution margin = Net sales revenue per unit - Variable costs per unit

Unit contribution margin = $75 - $35 = $40

   

550 Units

   

500 units

   

1200 units

   

400 units

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