Homework Answers
contribution margin is difference between sales price and variable cost
contribution margin should cover up target profit and fixed costs.
1) units to be sold= (fixed cost+target income)/contribution margin per unit
contribution margin = sales-variable cost
=$15-$10
=$5
units to be sold= (fixed cost+target income)/contribution margin per unit
=($3,000+$5,000)/$5
=$8000/5
=1,600 units
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