Opal Company manufactures a single product that it sells for $75 per unit and has a contribution margin ratio of 35%. The company's fixed costs are $45,000. If Opal desires a monthly target operating profit equal to 15% of sales, sales will have to be (rounded) :

Question

Laylah Boone

Business

29 January, 14:19

Opal Company manufactures a single product that it sells for $75 per unit and has a contribution margin ratio of 35%. The company's fixed costs are $45,000. If Opal desires a monthly target operating profit equal to 15% of sales, sales will have to be (rounded) :

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Answers (1)

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Nehemiah Johnson · Answer 1

3,000 units

Explanation:

The computation of the sales units is shown below:

As We know that

Operating Profit = Contribution Margin - Fixed Costs

15% of sales = 35% of sales - $45,000

20% of sales = $45,000

So, the sales is

= $45,000 : 0.20

= $225,000

Now the sales unit would be

= Sales : Selling price per unit

= $225,000 : $75 per unit

= 3,000 units