Pedaci Corporation produces and sells a single product. Data concerning that product appear below:
-Assume the company's monthly target profit is $17,000. The dollar 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 $17,000. The dollar sales to attain that target profit is closest to:

Quizplus · Accepted Answer

The contribution margin per unit is:

Selling price per unit - variable expenses per unit = $90 - $63 = $27.

To calculate the dollar sales to attain the target profit of $17,000, we need to use the formula:

(Target profit + Fixed expenses) / contribution margin ratio

The contribution margin ratio is:

Contribution margin per unit / selling price per unit = $27 / $90 = 0.3.

Fixed expenses are given as $84,000 per month.

Plugging in the values, we get:

($17,000 + $84,000) / 0.3 = $635,069.

Therefore, the closest dollar sales to attain the target profit of $17,000 is option B, $635,069.

Pedaci Corporation Produces and Sells a Single Product