The correct answer is: B. 9,833 units
To calculate the number of units that must be sold to achieve a profit of Rs 11,000, we can use the following formula:
- Total revenue = Selling price per unit * Number of units sold
- Total cost = Variable cost per unit * Number of units sold + Fixed cost
- Profit = Total revenue – Total cost
We are given the following information:
- Selling price per unit = Rs 6
- Variable production cost per unit = Rs 1.20
- Variable selling cost per unit = Rs 0.40
- Fixed production cost = Rs 4
- Fixed selling cost = Rs 0.80
- Budgeted production and sales for the year = 10,000 units
We can use this information to calculate the total revenue, total cost, and profit as follows:
- Total revenue = 6 * 10,000 = Rs 60,000
- Total cost = 1.20 + 0.40 + 4 + 0.80 = Rs 2.40 * 10,000 = Rs 24,000
- Profit = 60,000 – 24,000 = Rs 36,000
Since the company wants to achieve a profit of Rs 11,000, we can calculate the number of units that must be sold as follows:
- Number of units sold = (Profit + Total cost) / Selling price per unit
- Number of units sold = (11,000 + 24,000) / 6 = 9,833 units
Therefore, the company must sell 9,833 units to achieve a profit of Rs 11,000 for the year.
Option A is incorrect because it is the number of units that must be sold to break even. Option C is incorrect because it is the number of units that must be sold to achieve a profit of Rs 10,000. Option D is incorrect because it is the number of units that must be sold to achieve a profit of Rs 12,000.