Question

The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. Compute the number of units that must be sold in order to achieve a target pretax income of $218,000. Sales (58,000 units) $ 986,000 Costs: Direct materials $ 160,800 Direct labor 240,800 Fixed factory overhead 104,000 Variable factory overhead 150,800 Fixed marketing costs 110,800 Variable marketing costs 50,800 818,000 Pretax income $ 168,000

Answer 1

See below

Step-by-step explanation:

Given the above information, we need the below formula to start with.

Break even point = Fixed costs / Contribution margin

Price = $986,000 / 58,000 = $17

Variable cost = Direct material + direct labor + variable moh + variable marketing costs

= $160,800 + $240,800 + $150,800 + $50,800

= $603,200

Unitary variable cost = $603,200 / 58,000 = $10.4

Fixed costs = Fixed moh + fixed market

= $104,000 + $110,800

= $214,800

Profit = $218,000

Break even point = ($214,800 + $218,000) / ($17 - $10.4)

= $432,800 / $6.6

= 65,576 units