Question

Target pronit Outdoors Company seils a product for $245 per unit. The variable cost is $95 per unit, and fixed costs are $1,065,000. Determine (a) the break-even point in sales units and (b) the sales units required for the company to achieve a target profit of $213,000.

a.Break-even point in sales units units
b.Break-even point in sales units required for the company to achieve a target profit of $213,000 units

Answer 1

The break-even point in sales units is 7,100 units. The sales units required to achieve a target profit of $213,000 is 8,120 units.

Step-by-step explanation:

To determine the break-even point in sales units, we need to calculate the contribution margin per unit. The contribution margin is the selling price per unit minus the variable cost per unit. In this case, the contribution margin per unit is $245 - $95 = $150.

The break-even point in sales units can be calculated by dividing the fixed costs by the contribution margin per unit. In this case, the break-even point is $1,065,000 / $150 = 7,100 units.

To determine the sales units required to achieve a target profit of $213,000, we need to add the target profit to the fixed costs and then divide the sum by the contribution margin per unit. In this case, the required sales units are ($1,065,000 + $213,000) / $150 = 8,120 units.