Asked by Layton Bicanovsky on Apr 28, 2024
Verified
Speckman Enterprises, Incorporated, produces and sells a single product whose selling price is $200.00 per unit and whose variable expense is $68.00 per unit. The company's monthly fixed expense is $514,800. Assume the company's target profit is $11,000. The unit sales to attain that target profit is closest to:
A) 2,629 units
B) 3,983 units
C) 4,781 units
D) 7,732 units
Unit Sales
The quantity of products sold or services rendered to customers in a specific period.
Target Profit
The desired net income that a company aims to achieve within a specific time period.
- Determine the desired profit and compute the required unit and dollar sales to reach this objective.
Verified Answer
GL
Gabby LawhorneMay 02, 2024
Final Answer :
B
Explanation :
To find the unit sales needed to achieve a target profit, we use the formula: (Fixed Costs + Target Profit) / (Selling Price per Unit - Variable Cost per Unit). Plugging in the given values: ($514,800 + $11,000) / ($200 - $68) = $525,800 / $132 ≈ 3,983 units.
Learning Objectives
- Determine the desired profit and compute the required unit and dollar sales to reach this objective.