Question

Nombre Company management predicts $430,000 of variable costs, $970,000 of fixed costs, and a pretax income of $275,500 in the next period. Management also predicts that the contribution margin per unit will be $53.
Compute the total amount of dollar sales for the next period.

Compute the number of units to be sold next period.

Answer 1

Answer:

The total amount of dollar sales for the next period is $1,675,500

The number of units to be sold next period is 23,500

Explanation:

The sales less the total cost gives the pretax income. The costs are the fixed and variable cost. Contribution margin is the sales less the variable cost. Hence the pretax income is the difference between the contribution margin and the fixed cost.

Let the total sales in dollars be G

G - $430,000 - $970,000 = $275,500

G = $275,500 + $430,000 + $970,000

G = $1,675,500

Hence the total contribution margin

=  $1,675,500  - $430,000

= $1,245,500

Let the total number of units to be sold be t

$1,245,500 /t = $53

t = $1,245,500 /53

= 23,500

Answer 2

Answer:

Total amount of dollar sales for next period is $1,675,500

Number of units to be sold next period is 23,500 units

Explanation:

The dollar sales next period is the total costs plus pretax income.

Total costs is summation of fixed variable costs and fixed costs, that $1,400,000($430000+$970000)

Dollar sales is $1,675,500($1400,000+$275,500)

However, the number of units sold can be derived by dividing total contribution by contribution margin per unit.

Total contribution margin is calculated thus:

Total sales             $1,675,500

Variable costs        ($430,000)

total contribution  $ 1,245,500

Number units = 1,245,500/53

                       =23,500 units