lest. review as m This Question: 1 pt William\'s Steel Parts produces parts for

Question

lest. review as m This Question: 1 pt William's Steel Parts produces parts for the automobile industry The company has monthly fixed expen manufacturers are demanding lower prices, and the steel producers have increased raw material costs pressures, was $197,000 Read the requirements Requirement 1. To maintain this same level of profit what sales volume (in sales revenue) must Willia Begin by identifying the formula to compute the sales in units at various levels of operating income usi sh Round your answer up to the nearest whole dollar)

Explanation / Answer

Requirment 1

Target sales in dollars = (670,000+197,000) / 0.65

= 1,333,846

Requirment 2

Fixed expenses can only be $ 466,000 in order to maintain the prior profit level of $ 197,000 per month. Therefore, William will have to save at least $ 204,000 (670,000 - 466,000) per month in fixed costs by moving operations overseas if he plans to maintain his prior profit level.

(fixed expenses + target profit) / Contribution margin ratio = Target sales in dollars

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