Data concerning Strite Corporation's single product appear below: Assume the company's target profit is $8,000. The dollar sales to attain that target profit is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $429,200
B) $596,111
C) $1,532,857
D) $852,723

Question

Data concerning Strite Corporation's single product appear below:  Assume the company's target profit is $8,000. The dollar sales to attain that target profit is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $429,200 
B) $596,111 
C) $1,532,857 
D) $852,723

Quizplus · Accepted Answer

To calculate the dollar sales required to attain a target profit, we need to use the following formula:
Dollar sales = (Fixed costs + Target profit) / Contribution margin ratio

From the given data, we can calculate the contribution margin ratio as follows:
Contribution margin ratio = (Selling price - Variable cost per unit) / Selling price
= ($40 - $25) / $40
= 0.375

To calculate the dollar sales required to attain a target profit of $8,000, we need to plug in the values into the formula:
Dollar sales = ($52,500 + $8,000) / 0.375
= $160,000 / 0.375
= $426,666.67

Therefore, the closest answer choice is B) $596,111.

Data Concerning Strite Corporation's Single Product Appear Below: Assume