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 $12,000. The dollar sales to attain that target profit is closest to: (Round your intermediate calculations to 2 decimal places.)

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
CM ratio = Unit contribution margin ÷ Unit selling price = $132.00 per unit ÷ $200.00 per unit = 0.66
Dollar sales to attain a target profit = (Target profit + Fixed expenses) ÷ CM ratio
= ($12,000 + $514,800) ÷ 0.66
= $526,800 ÷ 0.66 = $798,182