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Evgen [1.6K]
2 years ago
10

Locus Company has total fixed costs of $121,000. Its product sells for $67 per unit and variable costs amount to $57 per unit. N

ext year Locus Company wishes to earn a pretax income that equals 15% of fixed costs. How many units must be sold to achieve this target income level
Business
1 answer:
Trava [24]2 years ago
8 0

Answer:

13,915 units

Explanation:

With regards to the above, we need to determine first the target or desired profit.

Desired profit = $121,000 × 15% = $18,150

The next step is to calculate the contribution margin, which is the difference between selling price and variable cost.

Contribution margin = Sales - Variable cost

Contribution margin = $67 - $57

Contribution margin = $10 per unit

Target sales is therefore;

Target sales = (Fixed cost + Target profit) / Contribution margin

Target sales = ($121,000 + $18,150) / $10

Target sales = $139,150 / $10

Target sales = 13,915 units

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Answer:

Explanation:

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Rule:  There is a creation of express warranty when a seller makes a description of the statement quality, condition or performance of goods sold. This warranty is created by the statement of facts and if the seller uses words to designate the value of the supposed goods, it will only be considered as an opinion that does not create any express warranty.

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