Valdez Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. The number of units that must be sold to achieve a target profit of $24,000 is closest to:

Question

Valdez Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.  The number of units that must be sold to achieve a target profit of $24,000 is closest to:

Quizplus · Accepted Answer

The contribution margin per unit is $8 ($32 - $24).

To achieve a target profit of $24,000, we need to use the following formula:

(Unit sales × Contribution margin per unit) - Fixed expenses = Target profit

(Units sales × $8) - $44,000 = $24,000

Unit sales × $8 = $68,000

Unit sales = 8,500 units

Therefore, the number of units that must be sold to achieve a target profit of $24,000 is closest to 7,800 units (since 8,500 units is not one of the answer options).

Valdez Corporation Has Provided the Following Contribution Format Income Statement