Question

Blossom Corporation has fixed costs of $274,950. It has a unit selling price of $9.30, unit variable cost of $7.85, and a target net income of $1,510,000. Compute the required sales in units to achieve its target net income. Required sales enter the required sales in units units

Answer 1

Answer:

1,231,000 units

Explanation:

Given that,

Fixed costs = $274,950

Selling price = $9.30 per unit

Unit variable cost = $7.85

Target net income = $1,510,000

Contribution margin:

= Sales per unit - Variable cost per unit

= $9.30 - $7.85

= $1.45

Target Contribution margin:

= Fixed costs + Target income

= $274,950 + $1,510,000

= $1,784,950

Units to be sold:

= Target Contribution margin ÷ Contribution margin

= $1,784,950 ÷ $1.45

= 1,231,000 units