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28 May, 23:27

Hughes Company manufactures harmonicas which it sells for $31 each. Variable costs for each unit are $18 and total fixed costs are $3,925. How many units must be sold to earn income of $5,500?

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  1. 29 May, 02:33
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    These are the options for the question:

    A) 725

    B) 423

    C) 304

    D) 524

    And this is the correct answer:

    A) 725

    Explanation:

    The total gross revenue under that level of production is: 725 x $31 = $22,475.

    The variable costs are: 725 x $18 = $13,050

    And the fixed costs are = $3,925

    Now we simply substract the total variable costs and fixed costs from the gross revenue to obtain our desired net income:

    $22,475 - $13,050 - $3,925 = $5,500
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Home » Business » Hughes Company manufactures harmonicas which it sells for $31 each. Variable costs for each unit are $18 and total fixed costs are $3,925. How many units must be sold to earn income of $5,500?
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