Scheidel Enterprises, Inc. produces and sells a single product whose selling price is $190.00 per unit and whose variable expense is $81.70 per unit. The company's monthly fixed expense is $682,290.
-Assume the company's monthly target profit is $31,000.The dollar sales to attain that target profit are closest to:

Question

Quizplus · Accepted Answer

Unit CM = Selling price per unit - Variable expenses per unit
= $190.00 per unit - $81.70 per unit = $108.30 per unit
CM ratio = Unit contribution margin F1F1F1S1F1F1F10 Unit selling price = $108.30 per unit F1F1F1S1F1F1F10 $190.00 per unit = 0.57
Dollar sales to attain a target profit = (Target profit + Fixed expenses)F1F1F1S1F1F1F10 CM ratio
= ($31,000 + $682,290)F1F1F1S1F1F1F10 0.57
= $713,290 F1F1F1S1F1F1F10 0.57 = $1,251,386