Sales = Variable Expenses + Fixed Expenses + Target Operating

Sales = Variable expenses + Fixed expenses + Target operating income
$4.50Q = $3.00Q + $120,000 + $0
$1.50Q = $120,000
Q = $120,000/$1.50 = 80,000 units
2.80,000 units x $4.50 = $360,000
3.Sales = Variable expenses + Fixed expenses + Target operating income
$4.50Q = $3.00Q + $120,000 + $90,000
$1.50Q = $210,000
Q = $210,000/$1.50 = 140,000 units
4.Margin of safety = Sales - Sales at break-even
= $540,000 - $360,000
= $180,000

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