n Corporation has a single product whose selling price is $120 per unit and whose variable expense is $80 per unit. The company's monthly fixed expense is $50,000. Required: 1. Calculate the unit sales needed to attain a target profit of $10,000.

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28 May, 05:01

n Corporation has a single product whose selling price is $120 per unit and whose variable expense is $80 per unit. The company's monthly fixed expense is $50,000. Required: 1. Calculate the unit sales needed to attain a target profit of $10,000.

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Sanaa Lopez · Answer 1

targeted profit can be achieved after covering total cost including fix cost

total cost = variable cost + fix cost

break even = total cost = total revenue

first we need to cover variable cost

Selling price = 120

Varaible cost = - 80

contribution margin = 40

Now we need to cover fix cost

break even = fix cost / contribution margin

break even = 50000/40

break even = 1250

now we need extra units to cover the targeted profit

targeted units = 10000/40

targeted units = 250

total units that should be sold for targted profit of $10000 = (250+1250) = 1500

or

we can solve through this method

targeted units = (fix cost+targeted profit) / CM per unit

targeted units = (50000+10000) / 40

targeted units = 60000/40

targeted units = 1500