The Manhattan Company sells its one and only product for $89.00 per unit.Variable costs per unit amount to $63.50,and total fixed costs are $3,697,500.If management desires a before tax profit of $765,000,total sales revenue must equal:
A)$ 2,670,000
B)$ 4,462,500
C)$15,575,000
D)$68,085,000

Question

Quizplus · Accepted Answer

To find the total sales revenue needed, first calculate the required number of units to be sold to achieve the desired profit. The contribution margin per unit is $89.00 - $63.50 = $25.50. The total contribution margin needed is the sum of fixed costs and desired profit: $3,697,500 + $765,000 = $4,462,500. Divide this by the contribution margin per unit: $4,462,500 / $25.50 = 175,000 units. Finally, multiply the number of units by the selling price per unit: 175,000 units * $89.00 = $15,575,000.

The Manhattan Company Sells Its One and Only Product for $89.00