US CMA Part 2 · Chapter 5 · Question 15 of 15
Yates Lighting sells lamps at $50 each with a variable cost of $30. Fixed costs are $210,000. How many lamps must be sold to earn a pre-tax profit equal to 15% of sales revenue?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) 16,800 units
Explanation
Profit required per unit = 15% x $50 = $7.50. Set 50Q - 30Q - $210,000 = 7.5Q, so (20 - 7.5)Q = $210,000 and Q = $210,000 / $12.50 = 16,800 units. Check: revenue $840,000, profit = $126,000 = 15% of sales.
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