Question

Blanchard Company manufactures a single product that sells for $140 per unit and whose total variable costs are $112 per unit. The company’s annual fixed costs are $400,400. Management targets an annual pretax income of $700,000

Answer 1

A	Annual Pretax Income desired	$                     700,000
B	Fixed Cost	$                     400,400
C = A+B	Total Contribution margin required	$                 1,100,400
D	Contribution margin per unit	$                               28
E = C/D	Units to be sold to achieve target income	39,300
F = E x $ 140	Sales dollars required to achieve target income	$                 5,502,000

• Working

A	Sale price per unit	$                       140.00
B	Variable Cost per unit	$                       112.00
C = A - B	Contribution margin per unit	$                         28.00

A	Fixed Cost	$                     400,400
B	Contribution margin per unit	$                               28
C = A/B	Break Even point in units	14,300
D = C x $ 140	Break Even point in Sales Dollars	$                 2,002,000