The formula used in performing cost-volume-profit (CVP)analysis for the Target Profit in Units,where t is the tax rate,is
A)(Total Fixed Costs + Before-Tax Target Profit)/ Unit Contribution Margin.
B)(Total Fixed Costs + Before-Tax Target Profit)/ Contribution Margin Ratio.
C)(Total Fixed Costs ´ t)/ Unit Contribution Margin.
D)(Total Fixed Costs + (Target Profit ´ t))/ Unit Contribution Margin.

Question

Quizplus · Accepted Answer

The correct formula for calculating the Target Profit in Units in cost-volume-profit (CVP) analysis is (Total Fixed Costs + Before-Tax Target Profit) / Unit Contribution Margin. This formula helps in determining how many units need to be sold to achieve a specific target profit, taking into account the fixed costs and the contribution margin per unit.

The Formula Used in Performing Cost-Volume-Profit (CVP)analysis for the Target