Data concerning Bedwell Enterprises Corporation's single product appear below: The unit sales to attain the company's monthly target profit of $17,000 is closest to:

Question

Data concerning Bedwell Enterprises Corporation's single product appear below:  The unit sales to attain the company's monthly target profit of $17,000 is closest to:

Quizplus · Accepted Answer

The contribution margin per unit is calculated as follows:

Selling price per unit - Variable cost per unit 
= $55 - $20 
= $35

To attain a monthly target profit of $17,000, the company needs to earn a profit of $17,000 + $4,000 (fixed costs) = $21,000.

The number of units required to earn a profit of $21,000 is:

(Unit contribution margin * X) = Target profit 
$35X = $21,000 
X = 600 units

Therefore, the company needs to sell 600 units to earn a profit of $21,000.

To calculate the number of units needed to achieve a target profit of $17,000, we need to adjust the calculation as follows:

(Unit contribution margin * X) = Target profit 
$35X = $17,000 + $4,000 
X = 480 units

Therefore, the closest option is B) 4,280 units. Unit CM = Selling price per unit - Variable expenses per unit
= $160.00 per unit - $65.60 per unit
= $94.40 per unit
Unit sales to attain a target profit = (Target profit + Fixed expenses)÷ Unit CM
= ($17,000 + $387,040)÷ $94.40 per unit
= $404,040 ÷ $94.40 per unit
= 4,280 units

Data Concerning Bedwell Enterprises Corporation's Single Product Appear Below