Tucker Corp. Tucker Corp. has the following product information:
Refer to the Tucker Corp. information above. How many units need to be sold in order to earn a target profit of $542,400?

Question

Tucker Corp. Tucker Corp. has the following product information:
 Refer to the Tucker Corp. information above. How many units need to be sold in order to earn a target profit of $542,400?

Quizplus · Accepted Answer

The contribution margin per unit is $60 - $30 = $30.

Using the formula: 
(target profit + total fixed costs) / contribution margin per unit = number of units needed to be sold

We can calculate: 
($542,400 + $1,260,000) / $30 = 42,240

However, since the company needs to earn a profit, we must add the break-even amount of units (28,135) to the calculated units needed (42,240).

42,240+28,135 = 70,375

Therefore, the company needs to sell 70,375 units to earn a target profit of $542,400. Rounded to the nearest whole unit, the answer is D) 122,375 units.