Moccio Enterprises, Inc., produces and sells a single product whose selling price is $120.00 per unit and whose variable expense is $37.20 per unit. The company's monthly fixed expense is $356,040. Assume the company's target profit is $14,000. The unit sales to attain that target profit is closest to:
A)3,084 units
B)4,469 units
C)5,833 units
D)9,947 units

Question

Quizplus · Accepted Answer

The formula to calculate the unit sales to attain target profit is as follows:

(Unit selling price × Number of units) - (Unit variable expense × Number of units) - Fixed expenses = Target profit

Using the given values:

($120 × N) - ($37.20 × N) - $356,040 = $14,000

$82.80N = $370,040

N ≈ 4,469

Therefore, the unit sales to attain the target profit of $14,000 is ~4,469 units. So, option B is the correct answer.