Sell in order to earn a net operating income

Assignment Help Financial Accounting

Reference no: EM13749180

Santa Fe Electronics sells televisions. The average selling price of a TV is $970. The TV's are purchased from manufacturers at an average cost of $680 per unit, which includes shipping. Since customers pick up TVs directly from the shop, the company pays no delivery charge. Sales people are paid a fixed salary plus a commission of $40 per unit. All selling and administrative expenses, including the salaries, ar fixed at a total of $58,000 per month. In order to increase their sales, the company has decided to increase the unit commission to $60 for every TV sold above break even point.

How many units of TV's does company need to sell in order to earn a net operating income of $11,500 per month (round all decimal to one unit)

A) 309

B) 293

C) 243

D) 282

E) None

Please show help with steps.

I know a formula which is target profit + fixed expenses / cm ratio but it does not really help in getting units.

Reference no: EM13749180

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