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A company has fixed costs per period as follows:
Manufacturing $56,000.00
Non-manufacturing $38,000.00
Variable costs of the company’s single product are $4.20 per unit and the selling price is $7.00 per unit. What sales revenue(to the nearest $000) is required in a period to make a profit of $6,000?
A $163,000
B $167,000
C $241,000
D 251,000Any solution?? Please help
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i think there’s some mistake in either typing the data or the options for the answers.
I agree with sarah
Applying the right formulae it doesn’t work 🙁
Target profit
Sales to achieve = (Fixed Cost + Target Profit)/Contrib.Contribution 7-4.2 = 2.8
Sales to ach. 🙁 56000+38000 +6000) /2.8
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exactly alfo’s method is my way, pls somebody remove such stupid question postings that rather distract ppl :@
Let’s say X=Units which need to be sold
We know that Profit = SalesRevenue- (Total Fcost + Total Vcost)
=> S.Revenue is in other terms = number of units sold (which we don’t know) * (times) cost per unit
=> Revenue = 7*X
=> Total Vcost = 4.2*X
so => 6000 = 7X – ((56000+38000) + 4.2X)
6000 = 7X – 94000 – 4.2X
=> 2.8X = 100000
=> X = 100000/2.8 = 35714.28571 units which need to be sold (rediculous)
S.Revenue = 7 * the giberish on top (35714.28571) = 250000
Which isn’t equal to the 4 given answers.
It takes longer to explain than to understand
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