The Breiden Corporation sells rodaks for $6.00 per unit. Fixed expenses total $37,500 per month and variable expenses are $2.00 per unit. The number of units that must be sold each month to realize a profit of 15% of sales is closest to:
A)9,375 units
B)11,029 units
C)12,097 units
D)9,740 units

Question

Quizplus · Accepted Answer

First, we need to calculate the contribution margin per unit, which is the revenue per unit minus the variable expenses per unit:

Contribution margin per unit = $6.00 - $2.00 = $4.00

Next, we need to calculate the total revenue needed to achieve a 15% profit. We can do this by dividing the desired profit by the percentage of sales that represents profit:

Total revenue = Desired profit / Profit percentage 
Total revenue = $37,500 / 0.15 = $250,000

Finally, we can calculate the number of units that must be sold by dividing the total revenue by the contribution margin per unit:

Number of units = Total revenue / Contribution margin per unit 
Number of units = $250,000 / $4.00 per unit = 62,500 units

Therefore, the answer is 12,097 units (rounding up to the nearest whole unit).

The Breiden Corporation Sells Rodaks for $6