The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. Compute the number of units that must be sold in order to achieve a target pretax income of $130,000.
A) 53,165.
B) 81,250.
C) 36,207.
D) 50,000.
E) 58,621.

Question

The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. Compute the number of units that must be sold in order to achieve a target pretax income of $130,000. 
A) 53,165. 
B) 81,250. 
C) 36,207. 
D) 50,000. 
E) 58,621.

Quizplus · Accepted Answer

Revenues − Variable Costs = Contribution Margin
$1,000,000 − ($270,000 + $240,000 + $150,000 + $50,000) = Contribution Margin
$1,000,000 − $710,000 = $290,000
$290,000/50,000 units to be sold = $5.80 budgeted contribution margin per unit
Budgeted unit sales = Total Fixed Costs + Target Pretax Income/CM Per Unit
Budgeted unit sales = [($100,000 + $110,000) + $130,000]/$5.80
Budgeted unit sales = $340,000/$5.80
Budgeted unit sales = 58,620.689 or 58,621

The Budgeted Income Statement Presented Below Is for Burkett Corporation