Reference no: EM132528666
Selling price per unit (package of 2 CDs)......................................$23.00
Variable costs per unit:
Direct material...............................................................................................................$4.00
Direct labor......................................................................................................................$4.00
Artist's royalties..............................................................................................................$4.00
Manufacturing overhead..........................................................................................$3.00
Selling expenses............................................................................................................$2.50
Total variable costs per unit............................................................$17.50
Annual fixed costs:
Manufacturing overhead..........................................................................................$188,000
Selling and administrative.......................................................................................$272,000
Total fixed costs................................................................................$460,000
Forecasted annual sales volume (120,000 units).........................$2,760,000
Question 1: How many units would ABC Inc. have to sell in order to earn operating income of $260,000?
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