Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $270. Annual fixed costs are $800,000. Current sales volume is $4,200,000.
-Flannigan Company management targets an annual pre-tax income of $1,125,000. Compute the unit sales to earn the target pre-tax net income.

Question

Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $270. Annual fixed costs are $800,000. Current sales volume is $4,200,000. 
-Flannigan Company management targets an annual pre-tax income of $1,125,000. Compute the unit sales to earn the target pre-tax net income.

Quizplus · Accepted Answer

The correct answer is A.Explanation:Target pre-tax income = $1,125,000Contribution margin per unit = $450 - $270 = $180Unit sales to earn target pre-tax net income = (Target pre-tax income + Fixed costs) / Contribution margin per unit= ($1,125,000 + $800,000) / $180= $10,694

Flannigan Company Manufactures and Sells a Single Product That Sells