Saved He Lin Corporation has a single product whose selling price is $134 per un

Question

Saved He Lin Corporation has a single product whose selling price is $134 per unit and whose variable expense is $67 per unit The company's monthly fixed expense is $31,750. Required 1. Calculate the unit sales needed to attain a target profit of $8,450. (Do not round intermediate calculations.) 2. Calculate the dollar sales needed to attain a target profit of $9,700. (Round your intermediate calculations to the nearest whole number.) kipped 1. Units sales to attain target profit 2. Dolar sales to attain target prof eBook Hint Print References

Explanation / Answer

SOLUTION

8.

(A) Contribution margin = Sales price - Variable cost

= $134 - $67 = $67

Unit Sales = (Fixed costs + Targer profits) / Contribution margin

= ($31,750 + $8,450) / $67

= $40,200 / $67

= 600 units

(B) Contribution margin ratio = Contribution margin / Sales price * 100

= $67 / $134 * 100= 50%

Dollar Sales = (Fixed costs + Targer profits) / Contribution margin ratio

= ($31,750 + $9,700) / 50%

= $82,900

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