Ocean City Kite Company sells kites for $11.50 per kite. In FY 2019, total fixed costs are expected to be $250,000 and variable costs are estimated at $3.00 a unit. Ocean City Kite Company wants to have a FY 2019 operating income of $90,000. Use this information to determine the number of units of kites that Ocean City Kite Company must sell in FY 2019 to meet this goal. (Round your answer to a whole number)

Question

Business

Sourdough

23 January, 13:46

Ocean City Kite Company sells kites for $11.50 per kite. In FY 2019, total fixed costs are expected to be $250,000 and variable costs are estimated at $3.00 a unit. Ocean City Kite Company wants to have a FY 2019 operating income of $90,000. Use this information to determine the number of units of kites that Ocean City Kite Company must sell in FY 2019 to meet this goal. (Round your answer to a whole number)

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Jade Wyatt · Answer 1

40,000 kits

Explanation:

The computation is shown below:

Number of kits required to be sold to meet the goal = Total Contribution Margin Required : Contribution Margin per Unit

where,

Total contribution margin required is

= Total fixed cost + operating income

= $250,000 + $90,000

= $340,000

And, the

Contribution Margin per Unit = Selling Price per Unit - Variable Cost per unit

= $11.50 - $3

= $8.50

So, the number of kits required is

= $340,000 : $8.50

= 40,000 kits