Blanchard Company manufactures a single product that sells for $180 per unit and

Question

Blanchard Company manufactures a single product that sells for $180 per unit and whose total variable costs are S128 per unit. The company's annual fixed costs are $484,000. Management targets an annual pretax income of $800,000. 1) Compute the unit sales to earn the target income. Choose Numerator: Choose Denominator: Units to Achieve Target Units to achieve target 2) Compute the dollar sales to earn the target income. Dollars to Achieve Target -Dollars to achieve target Choose Numerator: Choose Denominator

Explanation / Answer

1.

Units to achieve the target = (pretax income + fixed cost)/contribution margin per unit

Units to achieve the target = (800000+464000)/(160-128)

Units to achieve the target = 39500 units

2.

Value of dollar sales to earn the income = (pretax income + fixed cost)* price/contribution margin per unit

Value of dollar sales to earn the income = (800000+464000)*160/(160-128)

Value of dollar sales to earn the income = $6320000

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