Question

In: Accounting

Data concerning Cutshall Enterprises Corporation's single product appear below: Selling price per unit $ 250.00 Variable...

Data concerning Cutshall Enterprises Corporation's single product appear below:

Selling price per unit $ 250.00
Variable expense per unit $ 150.60
Fixed expense per month $ 480,964.00


The unit sales to attain the company's monthly target profit of $22,000 is closest to:

4,927

2,012

3,340

5,060

Solutions

Expert Solution

So the correct option is D

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Sale required to achieve desired profit = (Fixed cost + Desired profit)/ (Sales price per unit - Variable cost per unit)

Where,

Fixed cost = $480964

Selling price = $250

Variable cost = $150.6

Desired profit = $22000

Let's put all the values in the formula,

Required sale = (480964 + 22000)/ (250 - 150.6)

                             = 502964/ 99.4

                             = 5060

So to reach desired profit of $22000 required units that must be sold is 5060 units

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Hope that helps.

Feel free to comment if you need further assistance J


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