Final answer:
To meet the target profit of $14,000, Ferkil Corporation must sell 7,400 units, the closest figure exceeding the calculated 7,500 units when considering the options provided.
"The correct option is approximately option A"
Step-by-step explanation:
Given that Ferkil Corporation needs to sell 7,000 units to break even and has fixed expenses of $49,000 per year, we can establish the contribution margin per unit by using the selling price of $35.00 and the break-even point.
The contribution margin per unit is the difference between the selling price and the variable cost per unit. Determining the variable cost per unit (VC) involves dividing the total fixed costs by the break-even quantity: VC = Total Fixed Expenses / Break-even Quantity, which will be $49,000 / 7,000 units = $7. The contribution margin per unit is therefore $35 (selling price) - $7 (variable cost) = $28. To reach a target profit of $14,000, we divide this figure by the contribution margin: $14,000 / $28 = 500 units.
This represents the additional units needed to meet the target profit, adding to the 7,000 units required to break even, resulting in a total of 7,500 units required to meet the target profit. However, as there is no 7,500 option, and it is closest to 7,400 (the next highest number of units that would lead to a profit over the target profit), we can conclude that sales must be 7,400 units to meet and slightly exceed the target profit goal.