The budgeted income statement presented below is for Burkett Corporation for the

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.

Sales (50,000 units) $1,000,000 Costs:           Direct materials $270,000           Direct labor 240,000           Fixed factory overhead 100,000           Variable factory overhead 150,000           Fixed marketing costs   110,000           Variable marketing costs    50,000   920,000 Pretax income $80,000

Explanation / Answer

Sales (50,000 units) 10,00,000 Costs:           Direct materials 2,70,000           Direct labor 2,40,000           Variable factory overhead 1,50,000           Variable marketing costs 50,000 Total variable cost 7,10,000 Contribution 2,90,000 PV ratio 29%           Fixed factory overhead 1,00,000           Fixed marketing costs   1,10,000 Total Fixed Cost 2,10,000 Total Fixed Cost + Desired Profit 340000 PV ratio 29% Sales required=Total Fixed cost+Desired profit/PV ration 11,72,413.79 Sales price per unit 20 Sales units              58,621

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