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:
A) $596,111
B) $1,532,857
C) $852,723
D) $429,200

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:
A) $596,111 
B) $1,532,857 
C) $852,723 
D) $429,200

Quizplus · Accepted Answer

Unit CM = Selling price per unit - Variable expenses per unit
= $150.00 per unit - $42.00 per unit = $108.00 per unit
CM ratio = Unit CM ÷ Unit selling price = $108.00 per unit ÷ $150.00 per unit = 0.72
Dollar sales to attain a target profit = (Target profit + Fixed expenses) ÷ CM ratio
= ($8,000 + $421,200) ÷ 0.72
=$429,200 ÷ 0.72 = $596,111

Data Concerning Strite Corporation's Single Product Appear Below