Baker Company sells kites for $11

Accounting Nov 12, 2020

Baker 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 $3.50 a unit. Baker Company wants to have a FY 2019 operating income of $95,000. Use this information to determine the number of units of kites that Baker Company must sell in FY 2019 to meet this goal. (Round your answer to a whole number)

Expert Solution

Answer:

Sales price of kites =$11.50

Less: Variable cost = $3.50

Contribution margin = $8.00

Number of units to sell to attain profit of $95000:

=Fixed cost + expected profits / Contribution margin.

=250000+95000/8

=43,125 kites to be sold

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