Jean Simmons Company
Below is an income statement for Jean Simmons Company:
Sales $ \$ 300,000 $
Variable costs $\underline{(150,000)}$
Contribution margin $150,000
Fixed costs $\underline{(100,000)}$
Profit before taxes $\underline{\$50,000}$

Refer to Jean Simmons Company.If the unit sales price for Jean Simmons's sole product was $10,how many units would it have needed to sell to produce a profit of $40,000?

Question

Jean Simmons Company
Below is an income statement for Jean Simmons Company:
Sales                                                                          $ \$ 300,000 $
Variable costs                                                          $\underline{(150,000)}$
Contribution margin                                                  $150,000
Fixed costs                                                            $\underline{(100,000)}$
Profit before taxes                                                  $\underline{\$50,000}$

Refer to Jean Simmons Company.If the unit sales price for Jean Simmons's sole product was $10,how many units would it have needed to sell to produce a profit of $40,000?

Quizplus · Accepted Answer

To achieve a profit of $40,000, the total contribution margin needed is the sum of the desired profit ($40,000) and fixed costs ($100,000), which equals $140,000. Given the sales price of $10 per unit and variable costs of $5 per unit (calculated from the given data: $150,000 variable costs / $300,000 sales = 50% of sales price), the contribution margin per unit is $5 ($10 - $5). Therefore, to achieve a $140,000 total contribution margin, the company needs to sell 28,000 units ($140,000 / $5 per unit).

Jean Simmons Company Below Is an Income Statement for Jean $300,000 \$ 300,000 $300,000

Jean Simmons Company
Below Is an Income Statement for Jean $\$ 300,000$