Question

Velyfl168 Corporation manufacturers a single product that has a selling price of $40.00 per unit. Fixed expenses total $75,000 per year, and the company must sell 7,500 units to break even. If the company has a target profit of $16,000, sales in units must be:

Answer 1

9,100 units

Step-by-step explanation:

Firstly, we will determine the contribution margin.

Contribution margin = Fixed cost / Selling units

= $75,000 / 7,500 units

= $10

Target profit = Target profit + Fixed cost

= $16,000 + $75,000

= $91,000

Therefore, sales in unit must be

= $91,000 / $10

= 9,100 units