Contribution margin

XYZ Enterprises Corporation's single product appear below:

Selling Price Per Unit	Rs. 150
Variable Expense Per Unit	90
Fixed Expenses for the month	424,840

Total Sales in amount to attain the company's monthly target profit of Rs. 50,000 is closest to:

Solutions

Expert Solution

Contribution margin = Sales - Variable expenses

= Rs. 150 - 90

= Rs. 60 per unit

Contribution margin ratio = Contribution margin / Sales
= Rs. 60 / Rs. 150
= 40%

Total Sales to attain the target profit = (target profit + Fixed expenses) / Contribution margin ratio

= (Rs. 50,000 + Rs. 424,840) / 40%

= Rs. 1,187,100

Total Sales to attain the target profit = (target profit + Fixed expenses) / Contribution margin ratio

ANIL KUMAR answered 3 years ago

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