Brihon Corporation produces and sells a single product. Data concerning that product appear below: Selling price per unit$230.00Variable expense per unit$103.50Fixed expense per month$518,650Required: a. Assume the company's monthly target profit is $12,650. Determine the unit sales to attain that target profit.b. Assume the company's monthly target profit is $63,250. Determine the dollar sales to attain that target profit.
What will be an ideal response?
| Per Unit | Percent of Sales | |||||
| Selling price per unit | $ | 230.00 | 100 | % | ||
| Variable expense per unit | 103.50 | 45 | % | |||
| Contribution margin per unit and CM ratio | $ | 126.50 | 55 | % | ||
Unit sales to attain target profit = (Target profit + Fixed expenses) ÷ Unit CM
= ($518,650 + $12,650) ÷ $126.50 per unit = 4,200 units
b.
Dollar sales to attain target profit = (Target profit + Fixed expenses) ÷ CM ratio
= ($518,650 + $63,250) ÷ 0.55 = $1,058,000
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a. True b. False
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Fill in the blank(s) with the appropriate word(s).