Chapter 5, Problem 5.12BE

To determine

Fixed Cost: The fixed costs refer to the costs which do not change with the change in other factors in the business. It remains the same and does not vary with the output. The expenses like rent expenses, depreciation and taxes come under the fixed costs.

Variable Cost: The variable cost refers to the cost which varies with the level of output in the business. The variable cost varies with the change in production. The examples of variable cost are the salaries and wages, the freight charges and the commission.

Net Income: The net income refers to that part of income on which the profit of the company is calculated. The net income is the total earnings of the company and it is derived after subtracting all the expense and taxes from the income.

To determine: The required sales in units to achieve the target.