Question

Mauro Products distributes a single product, a woven basket whose selling price is $15 and whose variable expense is $12 per unit. The company's monthly fixed expense is $4,200. The company wants to have a profits of $12,000, how many units are required to be sold

Answer 1

The number of units required to be sold are 5,400 units.

Step-by-step explanation:

The following are given in the question:

Selling price per unit = $15

Variable expense per unit = $12

Monthly fixed expense = $4,200

Targeted profits = $12,000

Therefore, we have:

Contribution margin per unit = Selling price - Variable cost = $15 - $12 = $3

Units required to be sold = (Targeted profit + Monthly fixed expense) / Contribution margin per unit = ($12,000 + $4,200) / $3 = $16,400 / $3 = 5,400 units

Therefore, the number of units required to be sold are 5,400 units.