Question

Lin Corporation has a single product whose selling price is $120 per unit and whose variable expense is $80 per unit. The company's monthly fixed expense is $50,000. Required: 1. Calculate the unit sales needed to attain a target profit of $10,000. 2. Calculate the dollar sales needed to attain a target profit of $15,000. (For all requirements, do not round intermediate calculations.) 1. Units sales to attain target profit 2. Dollar sales to attain target profit

Answer 1

Answer :-

1. Units sales to attain target profit of $10,000:-

= (Fixed cost + target profit)/ Contribution Margin per unit

= ($50,000 + $10,000)/$120 - $80

= $60,000 / $40

= 1,500 units

2. Dollar sales to attain target Profit of $15,000:-

= (Fixed cost + Target Profit) / Contribution Margin Per Unit

= ($50,000 + $15,000) / $40

= 1,625 * $120

= $195,000

If you have any query ask in comment section. If you like the answer plz rate. Thanks