Date Company makes calendars. Information on cost per unit is as follows:
Fixed marketing expense totalled $13,000, and fixed administrative expense totalled $35,000. The price per calendar is $10.
$\begin{array}{lr}
\text { Direct materials } & \$ 1.50 \
\text { Direct labour } & 1.20 \
\text { Variable overhead } & 0.90 \
\text { Variable marketing expense } & 0.40
\end{array}$
-Refer to the Figure.How many units must be sold to yield a targeted income of $36,000?
A)5,833
B)6,000
C)12,000
D)14,000

Question

Date Company makes calendars. Information on cost per unit is as follows:
Fixed marketing expense totalled $13,000, and fixed administrative expense totalled $35,000. The price per calendar is $10.
 $\begin{array}{lr}
\text { Direct materials } & \$ 1.50 \
\text { Direct labour } & 1.20 \
\text { Variable overhead } & 0.90 \
\text { Variable marketing expense } & 0.40
\end{array}$
-Refer to the Figure.How many units must be sold to yield a targeted income of $36,000?
A)5,833
B)6,000
C)12,000
D)14,000

Quizplus · Accepted Answer

To find the number of units needed to achieve a targeted income, calculate the contribution margin per unit and use the formula: (Fixed Costs + Target Income) / Contribution Margin per Unit. Contribution Margin per Unit = Selling Price - Variable Costs = $10 - ($1.50 + $1.20 + $0.90 + $0.40) = $6. Fixed Costs = $13,000 + $35,000 = $48,000. Target Income = $36,000. Units needed = ($48,000 + $36,000) / $6 = 14,000.

Date Company Makes Calendars -Refer to the Figure