Rachal Corporation produces and sells a single product whose selling price is $150.00 per unit and whose variable expense is $57.00 per unit. The company's monthly fixed expense is $381,300. Required:a. Assume the company's monthly target profit is $9,300. Determine the unit sales to attain that target profit.b. Assume the company's monthly target profit is $18,600. Determine the dollar sales to attain that target profit.
What will be an ideal response?
| Per Unit | Percent of Sales | |||||
| Selling price per unit | $ | 150.00 | 100 | % | ||
| Variable expense per unit | 57.00 | 38 | % | |||
| Contribution margin per unit and CM ratio | $ | 93.00 | 62 | % | ||
a.
Unit sales to attain target profit = (Target profit + Fixed expenses) ÷ Unit CM
= ($381,300 + $9,300) ÷ $93.00 per unit = 4,200 units
b. Dollar sales to attain target profit = (Target profit + Fixed expenses) ÷ CM ratio
= ($381,300 + $18,600) ÷ 0.62 = $645,000
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