Speckman Enterprises, Inc., produces and sells a single product whose selling price is $200.00 per unit and whose variable expense is $68.00 per unit. The company's monthly fixed expense is $514,800. Assume the company's target profit is $11,000. The unit sales to attain that target profit is closest to:

Question

Quizplus · Accepted Answer

Unit CM = Selling price per unit - Variable expenses per unit
= $200.00 per unit - $68.00 per unit = $132.00 per unit
Unit sales to attain a target profit = (Target profit + Fixed expenses) ÷ Unit CM
= ($514,800 + $11,000) ÷ $132.00 per unit
=$525,800 ÷ $132.00 per unit = 3,983 units