Presto company makes radios that sell for $26 each. For the coming year, managem

Question

Presto company makes radios that sell for $26 each. For the coming year, management expects fixed costs to total to $223.900 and variable costs to be $17.94 per unit. Break even point is $722,258. Margin of safety is 27.12%
Compute the sales dollars required to earn net income of $58,200. Presto company makes radios that sell for $26 each. For the coming year, management expects fixed costs to total to $223.900 and variable costs to be $17.94 per unit. Break even point is $722,258. Margin of safety is 27.12%
Compute the sales dollars required to earn net income of $58,200.
Compute the sales dollars required to earn net income of $58,200.

Explanation / Answer

Contribution margin=Sales-Variable cost

= (26-17.94)=$8.06/unit

Target Contribution margin=Fixed cost+Target profits

=(223900+58200)=$282100

Hence units to be sold=(282100/8.06)=35000 units

(35000*26)

$910,000

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.