# How many units must be sold to earn a net income of $320,000?

## Question:

A company desires to sell a sufficient quantity of products to earn a profit of $320,000. If the unit sales price is $32, unit variable cost is $12, and total fixed costs are $800,000, how many units must be sold to earn net income of $320,000?

a) 88000 units

b) 56000 units

c) 50000 units

d) 41000 units

## Answer:

The company must sell 56,000 units to earn a net income of $320,000. Among the given answer options, the correct answer is 56,000 units.

To determine the number of units that must be sold to earn a net income of $320,000, we can use the following formula:

Net Income = (Unit Sales Price - Unit Variable Cost) * Number of Units - Total Fixed Costs

Given:

Unit Sales Price = $32

Unit Variable Cost = $12

Total Fixed Costs = $800,000

Net Income = $320,000

Let's plug in the values and solve for the number of units:

$320,000 = ($32 - $12) * Number of Units - $800,000

$320,000 = $20 * Number of Units - $800,000

$320,000 + $800,000 = $20 * Number of Units

$1,120,000 = $20 * Number of Units

Dividing both sides by $20:

Number of Units = $1,120,000 / $20

Number of Units = 56,000

Therefore, the company must sell 56,000 units to earn a net income of $320,000. Among the given answer options, the correct answer is 56,000 units.