Question

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. RST desires to earn a target income of $20,000. The sales level in dollars to achieve the desired target income is $ .

Answer 1

the sales level in dollars to attain the target income is $125,000

Step-by-step explanation:

The computation of the sales level in dollars to attain the target income is given below:

= (Fixed cost + target income) ÷ (selling price - variable cost) ÷ selling pric e

= ($30,000 + $20,000) ÷ ($10 - $6) ÷ $10

= $50,000 ÷ 40%

= $125,000

Hence, the sales level in dollars to attain the target income is $125,000