Question

Lin Corporation has a single product whose selling price is $135 per unit and whose variable expense is $54 per unit. The company's monthly fixed expense is $40,000 Required: 1. Calculate the unit sales needed to attain a target profit of $8,600. (Do not round intermediate calculations.) 2. Calculate the dollar sales needed to attain a target profit of $9,800. (Round your intermediate calculations to the nearest whole number.) Answer is complete but not entirely correct. 1 600 Units sales to attain target profit Dollar sales to attain target profit 2. s 614 X

Hello I need help figuring out where I'm going wrong, I attached my work of anyone can look to see and help me out.

thank you.

Answer 1

Unit sales to attain target profit	600	(Note 2)
Dollar sales to attain target profit	83,000	(Note 3)
Note 1:
Selling price	135
Less: Variable cost	-54
Contribution margin	81
Contribution margin ratio	60%
(Contribution margin / sales *100)
Note 2:
Target Units = (Fixed cost + target profits )/ contribution per unit
=(40000+8600)/81
600	Units
Note 3:
Target sales = (Fixed cost + target profit)/ contribution margin ratio
=(40000+9800)/60%
83,000
Tutorial Note: In answer (2), its asking for dollar sales value and not unit sales. Therefore it needs to be divided with contribution margin ratio and not by contribution margin per unit.