Mio Canoe Livery rents canoes and transports canoes and customers to and from their canoe trip on a local river.The trip is priced at $20 per person and has a CM ratio of 30%.Mio's fixed expenses are $84,000.Last year, sales were $400,000 and profit was $36,000.How many units need to be sold to break-even, and how many need to be sold to earn a profit of $42,000?

A) 1,800 and 2,100
B) 6,000 and 8,143
C) 14,000 and 21,000
D) 4,200 and 6,300

CM Ratio

The CM Ratio, or Contribution Margin Ratio, is a financial metric that shows the proportion of sales revenue that exceeds variable costs, indicating the amount available to cover fixed costs and generate profit.

Fixed Expenses

Costs that remain constant for a set period and do not vary with changes in activity level, production volume, or sales, such as lease payments and utility bills. This is a rephrased definition of Fixed Costs.

Profit

The financial gain achieved when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.