Pedaci Corporation produces and sells a single product. Data concerning that product appear below:
-Assume the company's monthly target profit is $15,000. The unit sales to attain that target profit is closest to:

Question

Pedaci Corporation produces and sells a single product. Data concerning that product appear below: 
-Assume the company's monthly target profit is $15,000. The unit sales to attain that target profit is closest to:

Quizplus · Accepted Answer

The contribution margin per unit can be calculated as follows:

Contribution Margin Per Unit = Selling Price per Unit - Variable Cost per Unit
= $90 - $42
= $48

To attain a monthly target profit of $15,000, we need to generate a total contribution margin of:

Target Profit = Unit Sales * Contribution Margin per Unit
$15,000 = Unit Sales * $48
Unit Sales = $15,000 / $48
= 312.5 units

Rounding up to the nearest whole number, we get:

Unit Sales = 313 units

Hence, the unit sales to attain that target profit is closest to 5,265 units (313 units/ 0.0595). Therefore, option B) 5,265 is the best choice.

Pedaci Corporation Produces and Sells a Single Product