Question

Flannigan Company manufactures and sells a single product that sells for $600 per unit; variable costs are $318. Annual fixed costs are $991,700. Current sales volume is $4,310,000. Flannigan Company management targets an annual pre-tax income of $1,235,000. Compute the dollar sales to earn the target pre-tax net income.

Answer 1

See below

Step-by-step explanation:

Computation of target pretax

Break even point (Target profit)

= (Fixed cost + Target profit) × Selling price / Contribution margin

= ($991,700 + $1,235,000) × $600 / $600 - $318

= $2,226,700 × $600 / $282

= 4,737,659.57