Dowthwaite Bentham plc manufactures a standard model of suitcase.Each suitcase sells for £32.50.Variable labour and materials costs of manufacture are £8.73.Fixed costs for the 20X2 financial year are budgeted at £388 500 and the directors have set a target profit figure for the year of £150 000. What is the value of sales that the company must make in the 20X2 financial year in order to reach the target profit (working to the nearest whole unit and £)?

Question

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Explanation:Sales revenue = £32.50 x units soldVariable costs = £8.73 x units soldContribution = £23.77 x units soldFixed costs = £388 500Target profit = £150 000Contribution = Fixed costs + Target profit£23.77 x units sold = £388 500 + £150 000Units sold = £538 509 / £23.77Units sold = 22 672 (nearest whole unit)Sales revenue = £32.50 x 22 672Sales revenue = £736 288

Dowthwaite Bentham Plc Manufactures a Standard Model of Suitcase