9514 1404 393
Answer:
- contribution margin: $24
- break-even sales: 17,917
- target sales: 27,667
Explanation:
The contribution margin is the difference between the selling price of a unit and its variable cost. Here, that difference is ...
$67 -43 = $24 . . . contribution margin
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The break-even sales will be the number of sales required for the total contribution margin to equal the fixed operating costs:
$430,000/($24/unit) = 17,916 2/3 units ≈ 17,917 units . . . sales to break even
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The target sales will be the number of sales to cover fixed costs and $234,000 more.
($430,000 +234,000)/($24/unit) = 27,666 2/3 units
≈ 27,667 units . . . to achieve target income