QUESTION 50 TopSail Company TopSail Company produces one typ

QUESTION 50 TopSail Company TopSail Company produces one type of machine which has a unit contribution margin of $6. TopSail has total annual fioxed costs of $2,700,000. How many units must be sold to make an operating profit of $300,000 for the year? 500,000 1,000,000 1,500,000 2,000,000

Solution

Required contribution margin=Fixed cost+Target operating profit

=(2,700,000+300,000)=$3,000,000

Hence units to be sold=$3,000,000/6

which is equal to

=500,000.