If a firm has $4 00 000 in fixed costs, a unit contribution margin of $60 and a target net profit of $80 000, the target sales volume to achieve this profit would be 8000 units.

Question

Quizplus · Accepted Answer

To calculate the target sales volume, we can use the formula:

Target Sales Volume = (Fixed Costs + Target Net Profit) / Unit Contribution Margin

Substituting the given values, we have:

Target Sales Volume = ($400,000 + $80,000) / $60
Target Sales Volume = $480,000 / $60
Target Sales Volume = 8,000 units

Therefore, the answer is A) True.

If a Firm Has $4 00 000 in Fixed Costs