Problem #3 Brihon Corporation produces and sells a single product. Data concerni

Question

Problem #3

Brihon Corporation produces and sells a single product. Data concerning that product appear below:

Selling price per unit

$

230.00

Variable expense per unit

$

103.50

Fixed expense per month

$

518,650

Required:

a. Assume the company's monthly target profit is $12,650. Determine the unit sales to attain that target profit.

b. Assume the company's monthly target profit is $63,250. Determine the dollar sales to attain that target profit.

Selling price per unit

$

230.00

Variable expense per unit

$

103.50

Fixed expense per month

$

518,650

Explanation / Answer

Contribution margin=Sales-Variable costs

=(230-103.5)=126.5

1.Target Contribution margin=Fixed costs+Target profits

=(518650+12650)=$531300

Hence unit sales=(531300/126.5)=4200 units

2.Target Contribution margin=(518650+63250)=$581900

Hence unit sales=(581900/126.5)=4600 units

=(4600*230)=$1,058,000

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