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 $209,800.

Sales (57,000 units) $ 969,000
Costs:
Direct materials $ 167,800
Direct labor 240,000
Fixed factory overhead 100,000
Variable factory overhead 150,700
Fixed marketing costs 110,700
Variable marketing costs 40,000 809,200
Pretax income $ 159,800

Answer 1

64,692

Explanation:

For computation of budgeted number of units first we need to find out the contribution margin and budgeted contribution margin per unit which is shown below:-

Contribution Margin

= Revenues -Variable Costs

= $969,000 - ($167800 + $240,000 + $150,700 + $40,000)

= $969,000 - $598,500

= $370,500

Budgeted contribution margin per unit = Contribution Margin ÷ Sales units

= $370,500 ÷ 57,000 units

= 6.50

Budgeted Unit Sales = Total Fixed Costs + Target Pretax Income ÷ Contribution margin per unit

= (($100,000 + $110,700) + $209,800) ÷ 6.50

= $420,500 ÷ 6.50

= 646,92.31

or

= 64,692