The budgeted income statement presented below is for Burkett Corporation for the

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 $177,200.

Multiple Choice

a. 130,533.

b. 54,944.

c. 30,333.

d. 51,400.

e. 102,589.

Sales (48,000 units) $ 1,056,000 Costs: Direct materials $ 266,200 Direct labor 241,400 Fixed factory overhead 107,000 Variable factory overhead 151,400 Fixed marketing costs 111,400 Variable marketing costs 51,400 928,800 Pretax income $ 127,200

Explanation / Answer

Option B is correct

Contribution margin = Sales - Variable cost

= $345600

Contribution per unit = $345600 / 48000

= $7.2

Target unit to be sold =( $177200 + $107,000+$111,400) Contribution per unit

= 54944 Units

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