Data concerning Shanor Enterprises Corporation's single product appear below:
The unit sales to attain the company's monthly target profit of $13,000 is closest to:

Question

Data concerning Shanor Enterprises Corporation's single product appear below: 
The unit sales to attain the company's monthly target profit of $13,000 is closest to:

Quizplus · Accepted Answer

To determine the unit sales needed to attain the monthly target profit of $13,000, we need to use the contribution margin ratio (CM ratio) formula:

CM ratio = Total contribution margin / Total sales

We are not given the actual numbers for total sales and total contribution margin, but we can use the given information to find the CM ratio:

Sales price per unit = $70
Variable cost per unit = $45
Contribution margin per unit = $70 - $45 = $25

CM ratio = $25 / $70 = 0.3571 or 35.71%

Next, we can use the CM ratio and the target profit to find the total sales needed:

Target profit = Total contribution margin - Fixed expenses
$13,000 = (0.3571 x Total sales) - $17,000

Solving for Total sales, we get:

Total sales = ($13,000 + $17,000) / 0.3571
Total sales = $75,000 / 0.3571
Total sales = $209,859.14

Finally, we can use the sales price per unit to find the unit sales needed:

Unit sales = Total sales / Sales price per unit
Unit sales = $209,859.14 / $70
Unit sales ≈ 3,805

Therefore, the closest answer choice is B) 3,805.

Data Concerning Shanor Enterprises Corporation's Single Product Appear Below