Question

Ferkil Corporation manufacturers a single product that has a selling price of $25.00 per unit. Fixed expenses total $52,000 per year, and the company must sell 6,500 units to break even. If the company has a target profit of $15,000, sales in units must be:

Answer 1

Answer:

8375 units

Explanation:

Given: Fixed expenses = $52,000, Number of units to be sold = 6500 units, target profit = $15000

At breakeven; contribution margin = fixed cost = $52000

Hence contribution margin per unit = $52000/6500 = $8 per unit

Target contribution margin = Fixed cost + Target profits

= (52000+15000) = $67000

Hence sales in units = (67000/8) = 8375 units.