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Andrej [43]
3 years ago
13

Solemon Company has total fixed cost of $15,000, variable cost per unit of $6, and a price of $8. If Solemon wants to earn a tar

geted profit of $3,600, how many units must be sold?
Business
1 answer:
mojhsa [17]3 years ago
8 0

Answer:

If Solemon wants to earn a targeted profit of $3,600, the number of units must be sold are 9,300 units.

Explanation:

In Solemon Company:

Contribution margin per unit = Sales price – Variable cost per unit = $8-$6=$2

The number of units must be sold to meet the target profit figure are calculated by using following formula:

The number of units must be sold = (Total fixed cost + Targeted profit) / Contribution margin per unit.

In there: Total fixed cost are $15,000

Targeted profit are $3,600

The number of units must be sold = ($15,000 + $3,600)/$2 = $18,600/$2 = 9,300 units.

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