Upchurch Corporation produces and sells a single product. Data concerning that product appear below: Assume the company's target profit is $14,000. The dollar sales to attain that target profit is closest to:
A)$326,180
B)$593,248
C)$494,212
D)$959,353

Question

Upchurch Corporation produces and sells a single product. Data concerning that product appear below:  Assume the company's target profit is $14,000. The dollar sales to attain that target profit is closest to:
A)$326,180 
B)$593,248 
C)$494,212 
D)$959,353

Quizplus · Accepted Answer

To calculate the dollar sales needed to attain the target profit, we can use the following formula:

Target Profit = (Sales - Variable Expenses) - Fixed Expenses

We are given the target profit as $14,000. Variable expenses per unit are $19 and the selling price per unit is $36. Therefore, the contribution margin per unit is:

Contribution Margin = Selling Price - Variable Expenses
= $36 - $19
= $17

Using the contribution margin, we can calculate the number of units that need to be sold to attain the target profit:

Units Sold = (Target Profit + Fixed Expenses) / Contribution Margin
= ($14,000 + $118,000) / $17
= 8,000 units

Finally, we can calculate the dollar sales needed to attain the target profit by multiplying the number of units sold by the selling price per unit:

Dollar Sales = Units Sold x Selling Price
= 8,000 x $36
= $288,000

Therefore, the closest option to the dollar sales needed to attain the target profit of $14,000 is option C, $494,212.

Upchurch Corporation Produces and Sells a Single Product