Tucker Corp.
Tucker Corp. has the following product information:
$$\begin{array} { l l }
\text { Sales price } & \$ 12 \text { per unit } \
\text { Contribution margin ratio } & 40 \% \
\text { Fixed costs } & \$ 45000
\end{array}$$
-How many units need to be sold in order to earn a target profit of $542 400?

Question

Tucker Corp.
Tucker Corp. has the following product information:
$$\begin{array} { l l } 
\text { Sales price } & \$ 12 \text { per unit } \
\text { Contribution margin ratio } & 40 \% \
\text { Fixed costs } & \$ 45000
\end{array}$$
-How many units need to be sold in order to earn a target profit of $542 400?

Quizplus · Accepted Answer

To find the number of units needed to earn a target profit, we use the formula: $$ \text{Units} = \frac{\text{Fixed Costs} + \text{Target Profit}}{\text{Contribution Margin per Unit}} $$ First, find the contribution margin per unit: $$ \text{Contribution Margin per Unit} = \text{Sales Price} \times \text{Contribution Margin Ratio} = \$12 \times 40\% = \$4.8 $$ Then, calculate the units needed: $$ \text{Units} = \frac{\$45,000 + \$542,400}{\$4.8} = \frac{\$587,400}{\$4.8} = 122,375 $$

Tucker Corp -How Many Units Need to Be Sold in Order to