Question

Deines Corporation has fixed costs of $480,000. It has a unit selling price of $6, unit variable cost of $4.4, and a target net income of $1,500,000. Compute the required sales in units to achieve its target net income.

Answer 1

The required sales in units to achieve its target net income is 1,237,500 units.

Explanation:

From the given information it is clear that

Fixed cost = $480,000

Selling Price = $6 per unit

Variable Cost = $4.4 per unit

Target net income = $1,500,000

We need to find the required sales in units to achieve its target net income.

`Units=\frac{\text{Fixed cost + Target net income}}{\text{Selling Price - Variable Cost}}`

`Units=(480000+1500000)/(6-4.4)`

`Units=(1980000)/(1.6)`

`Units=1237500`

Therefore the required sales in units to achieve its target net income is 1,237,500 units.