Question

Flannigan Company manufactures and sells a single product that sells for $580 per unit; variable costs are $319.

Annual fixed costs are $958,500.

Current sales volume is $4,330,000.

Flannigan Company management targets an annual pre-tax income of $1,255,000.

Compute the dollar sales to earn the target pre-tax net income.

Answer 1

$4,918,889

Step-by-step explanation:

Target Sales Can be calculated using target income, fixed cost and contribution margin ratio.

Contribution margin ration is the rate of contribution margin to the sales value of the given product.

Contribution Margin = Sales Price - Variable cost = $580- $319 = $261

Contribution Margin ratio = Contribution Margin / Sales = $261 / $580 = 0.45 = 45%

Sales = ( Target Income + Fixed Cost ) / Contribution Margin ratio

Sales = ( $1,255,000 + $958,500 ) / 45%

Sales = $2,213,500 / 0.45 = $4,918,889

Answer 2

The company need to sale $4,918,888.89.

Step-by-step explanation:

Giving the following information:

Flannigan Company manufactures and sells a single product that sells for $580 per unit; variable costs are $319.

Annual fixed costs are $958,500.

Desired income= $1,255,000.

To calculate the total dollar sales to reach the goal, we need to use the break-even point formula:

Break-even point (dollars)= (fixed costs + desired profit)/ contribution margin ratio

Break-even point (dollars)= (958,500 + 1,255,000) / [(580 - 319) / 580]

Break-even point (dollars)= 2,213,500 / 0.45

Break-even point (dollars)= $4,918,888.89