Question

What should be the formula in B7?

	A	B
1	Variable Costs	$       8,400,000
2	Fixed Costs	$       1,750,000
3	Unit Sales	$          200,000
4	Price per unit	$                    70
5	Variable Costs Per Unit	$                    42
6	Target EBIT	$       1,000,000
7	Units to Reach Target EBIT	???????

A) B2+B6/B4-B5

B) (B2+B6)/B4-B5

C) (B2+B6)/(B4-B5)

Answer 1

Answer: C) (B2+B6)/(B4-B5)

.

Units to Reach Target EBIT = (Fixed cost + Target EBIT) + (Contribution margin per unit)

= (Fixed cost + Target EBIT) + (Selling Price per unit - Variable Costs Per Unit)

= (B2 + B6) / (B4 - B5)