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11:11 AM * 28%. v2.cengagenow.com kers.... Jeans To... Does Diet.. Blackboar Cengage Cengag... Sign in -C.Ramirez C.. Target Proft Ramirez Company sells a product for $80 per unit. The variable cost is $60 per unit, and fixed costs are $4,850,000. Determine (a) the break-even point in sales units and (b) the break-even point in sales units required for the company to achieve a target profit of $500,000. a. Break-even point in sales units b. Break-even point in sales units required for the company to achieve a target profit of $500,000 Previous Next Check My Work

Explanation / Answer

Contribution margin=Sales-Variable costs

=(80-60)=$20 per unit

1.Breakeven point=Fixed cost/Contribution margin

=4,850,000/20=242500 units.

2.Target Contribution margin=Fixed costs+Target profits

=(4,850,000+500,000)=$5,350,000
Hence target unit sales=(5,350,000/20)=267500 units.

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