Perona Corporation produces and sells a single product. Data concerning that product appear below: The unit sales to attain the company's monthly target profit of $9,000 is closest to:

Question

Perona Corporation produces and sells a single product. Data concerning that product appear below:  The unit sales to attain the company's monthly target profit of $9,000 is closest to:

Quizplus · Accepted Answer

To find the unit sales to attain the company's monthly target profit of $9,000, we can use the following formula:

Unit Sales = (Total Fixed Costs + Target Profit) / Contribution Margin per Unit

From the given data, we can calculate the contribution margin per unit as follows:

Contribution Margin per Unit = Selling Price per Unit – Variable Cost per Unit
= $36 – $20
= $16

We also know that the total fixed costs are $10,800.

Substituting these values into the formula, we get:

Unit Sales = ($10,800 + $9,000) / $16
= 825 units

Therefore, the correct answer is B) 4,400 units.

Perona Corporation Produces and Sells a Single Product