Homework Answers
Answer D : 5564 units
Calculated as
| Calculation of Contribution margin in 2019 | |||||
| Units | Per Unit | Total | |||
| Sale | 5150 | $ 255.40 | $1,315,310 | ||
| Less: Variable cost | 5150 | $ 131.90 | $679,285 | ||
| Contribution per door | 5150 | $ 123.50 | $636,025 | ||
| Calculation of Contribution margin in 2020 | |||||
| Units | Per Unit | Total | |||
| Sale | 5150 | $ 255.40 | $1,315,310 | ||
| Less: Variable cost new = $131.90+3.20= | 5150 | $ 135.10 | $695,765 | ||
| Contribution | 5150 | $ 120.30 | $619,545 | ||
| New Fixed cost | =679000-49600 | $629,400 | |||
| Target Profit | $ 40,000 | ||||
| Number of Units to earn target profit in 2020 | =Fixed cost + Target profit/Contribution per pizza | ||||
| =(629400+40000)/$120.30 | |||||
| 5564.42 | |||||
| 5564 | units | (Rounded off) | |||
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