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 $177,200.

Multiple Choice

a. 130,533.

b. 54,944.

c. 30,333.

d. 51,400.

e. 102,589.

Sales (48,000 units) $ 1,056,000 Costs: Direct materials $ 266,200 Direct labor 241,400 Fixed factory overhead 107,000 Variable factory overhead 151,400 Fixed marketing costs 111,400 Variable marketing costs 51,400 928,800 Pretax income $ 127,200

Explanation / Answer

Income Statement of Burkett Corporation Particulars Amount Units Perunit Sales 1056000 48000 22 Variable costs Direct Material 266200 Direct Labor 241400 Variable Factory Overheads 151400 Variable marketing cost 51400 710400 48000 14.8 Marginal Profit 345600 7.2 Fixed Cost Fixed Factory Overheads 107000 Fixed marketing cost 111400 218400 Pretax Income 127200 Computations Required Pretax income 177200 Fixed cost 218400 required gross profit(pretax income +fixed cost) 395600 Gross profit per unit 7.2 Required Units (Gross profit/unit cost) 54944.4 The answer is option "b"

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