Acme Medical Supply desires a target operating income amount of $100,000 with th

Question

Acme Medical Supply desires a target operating income amount of $100,000 with the assumptions listed below. Assumptions: Desired (target) operating income amount: 100,000 Unit price for sales: 80 Variable cost per unit: 60 Total fixed cost: 60,000 Calculate the required revenue to achieve the target operating income: Complete the Contribution Income Statement to prove the totals: Revenue: 640,000 Variable cost: 480,000 Contribution margin: 160,000 Fixed costs: 60,000 Target operating income: 100,000 Number of unites needed: 640,000
(1) The number of units needed to be sold in order to attain $100,000 in net income.
(2) The number of units needed to be sold in order to break even.
Acme Medical Supply desires a target operating income amount of $100,000 with the assumptions listed below. Assumptions: Desired (target) operating income amount: 100,000 Unit price for sales: 80 Variable cost per unit: 60 Total fixed cost: 60,000 Calculate the required revenue to achieve the target operating income: Complete the Contribution Income Statement to prove the totals: Revenue: 640,000 Variable cost: 480,000 Contribution margin: 160,000 Fixed costs: 60,000 Target operating income: 100,000 Number of unites needed: 640,000
(1) The number of units needed to be sold in order to attain $100,000 in net income.
(2) The number of units needed to be sold in order to break even.
Acme Medical Supply desires a target operating income amount of $100,000 with the assumptions listed below. Assumptions: Desired (target) operating income amount: 100,000 Unit price for sales: 80 Variable cost per unit: 60 Total fixed cost: 60,000 Calculate the required revenue to achieve the target operating income: Complete the Contribution Income Statement to prove the totals: Revenue: 640,000 Variable cost: 480,000 Contribution margin: 160,000 Fixed costs: 60,000 Target operating income: 100,000 Number of unites needed: 640,000
(1) The number of units needed to be sold in order to attain $100,000 in net income.
(2) The number of units needed to be sold in order to break even. (1) The number of units needed to be sold in order to attain $100,000 in net income.
(2) The number of units needed to be sold in order to break even.

Explanation / Answer

CALCULATION OF CONTRIBITON MARGIN % Selling price per unit = $                                      80.00 Less : Varable Cost per unit - $                                      60.00 Contribution per unit $                                      20.00 Contribution margin % = 25.00% ($ 20 / $ 80) Answer = 1 CALCULATION OF NUMBER OF UNIT SOLD FOR DESIRED PROFIT OF $ 100,000 Net Income =   $                          1,00,000.00 Add: Fixed Cost = $                             60,000.00 Contribution need = $                          1,60,000.00 Sales = Contribution Need X 100 / Contribution margin %   Sales = $ 160,000 X 100 /25   Sales = $ 640,000 Number of unit sold = Total Sales Price / Selling price per unit Number of unit sold = $ 640,000 / $ 80 Number of unit sold = 8000 units @ $ 80 per unit Answer =2) CALCULATION OF THE NUMBER OF UNIT FOR BREAK EVEN = Breakeven point = Fixed Cost / Contribution margin Breakeven point = $ 60,000 / 0.25 Breakeven point = $ 240,000 So, Sales volume =   $                          2,40,000.00 Selling price per unit = $                                      80.00 No. of units = ($ 240,000 / $ 80) 3000 units

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