Question

Tropp Corporation sells a product for $10 per unit. The fixed expenses are $420,000 per month and the unit variable expenses are 60% of the selling price. What sales would be necessary in order for Tropp to realize a profit of 10% of sales

Answer 1

Answer:

$1400,000

Explanation:

So here,

Fixed cost is $420,000.

Selling price is $10

Variable cost are 60% of selling price = $10 * 60% = $6 per unit

Contribution per unit  = Selling price - Variable cost = $10 - $6 = $4 per unit

If variable costs are 60% and Target Profit is 10% then this means that the fixed cost are 30%

So

Sales required = Fixed cost *10% / 30% = $1400,000