The budgeted income statement presented below is for Griffith Corporation for the coming fiscal year.If Griffith Corporation's income tax rate is 40%,compute the number of units that must be sold in order to achieve a target pretax income of $130,000.

Question

Quizplus · Accepted Answer

Revenues - Variable Costs = Contribution Margin
$1,000,000 - ($270,000 + $240,000 + $150,000 + $50,000) = Contribution Margin
$1,000,000 - $710,000 = $290,000
$290,000 / 50,000 units to be sold = $5.80 budgeted contribution margin per unit
Budgeted unit sales = Total Fixed Costs + Budgeted Pretax Income / CM Per Unit
Budgeted unit sales = [($100,000 + $110,000) + $130,000] / $5.80
Budgeted unit sales = $340,000 / $5.80
Budgeted unit sales = 58,620.689 or 58,621

The Budgeted Income Statement Presented Below Is for Griffith Corporation