Question

Juniper enterprises sells handmade clocks. its variable cost per clock is $9.50, and each clock sells for $19.00. the company’s fixed costs total $6,175. how many clocks must juniper sell to earn a profit of at least $7,030?

Answer 1

Juniper Enterprises must sell 1,390 clocks to earn a profit of at least $7,030. This is found by calculating the contribution margin and then determining the number of units needed to cover both fixed costs and desired profit.

Step-by-step explanation:

To calculate how many clocks Juniper Enterprises must sell to earn a profit of at least $7,030, we need to use the concept of break-even analysis in business. First, we must find the contribution margin per clock, which is the sale price per clock minus the variable cost per clock. Then we use the following formula to find the break-even point in units:

Break-even point in units = Fixed Costs / (Sale Price per Unit - Variable Cost per Unit)

In this case, the sale price per clock is $19.00, and the variable cost per clock is $9.50, giving us a contribution margin of $9.50 per clock. To find the number of clocks needed to break even:

Break-even point in units = $6,175 / ($19.00 - $9.50) = $6,175 / $9.50 = 650 clocks

To achieve a profit of $7,030, we add this amount to the fixed costs and then divide by the contribution margin.

Required number of clocks to achieve the profit = (Fixed Costs + Desired Profit) / Contribution margin per clock

Required number of clocks to achieve the profit = ($6,175 + $7,030) / $9.50 = $13,205 / $9.50 = 1,390 clocks (rounded up)

So, Juniper Enterprises must sell 1,390 clocks to earn a profit of at least $7,030.