Question

Valdez Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.
Sales (6,000 units) $240,000
Variable expenses 180,000
Contribution margin 60,000
Fixed expenses 54,000
Net operating income 6,000

The number of units that must be sold to achieve a target profit of $24,000 is closest to: _______

Answer 1

Answer:

7,800 units

Explanation:

Contribution margin per unit = 60,000 / 6,000 units

Contribution margin per unit = $10 per unit

Number of Units = (Target Profit + Fixed Expense) / Contribution margin per unit

Number of Units = ($24,000 + $54,000) / $10

Number of Units = $78,000 / $10

Number of Units = 7,800

So, the number of units that must be sold to achieve a target profit of $24,000 is 7,800 units