Question - Jason Timberwolf owns and operates Timberwolf Industries, a firm that makes very cheap, discounted bowling balls. Here's the essential information on this production operation, and keep in mind that when we use the term "unit" we're referring to each bowling ball produced by Timberwolf:
Sale price per unit - $10
Variable costs per unit:
Direct Materials - $1
Direct Labor - $2
Variable portion of Mfg OH - $3
Total variable cost per unit - $6, and also given that the company's annual total fixed costs are $1 million:
a) How many units will the company need to sell in a year in order to make a profit of $5 million?
b) How much in annual sales dollars (sales revenue) will the company need to sell in order to make a profit of $5 million?