Check my wor 4 Blanchard Company manufactures a single product that sells for $1
ID: 2553462 • Letter: C
Question
Check my wor 4 Blanchard Company manufactures a single product that sells for $180 per unit and whose total variable costs are $135 per unit. The company's annual fixed costs are $562,500. Management targets an annual pretax income of $1,012,500. Assume that fixed costs remain at $562,500. 8.33 points (1) Compute the unit sales to earn the target income Choose Denominator: Units to achieve t eBook Hint Print References (2) Compute the dollar sales to earn the target income Dollars to achieve targetExplanation / Answer
Answer:-1)-Unit sales to earn the target income =Fixed cost+ Target income/Contribution margin per unit
=$562500+$1012500/$45 per unit
=35000 units
Contribution margin per unit=Selling price per unit – Variable cost per unit
=$180 per unit - $135 per unit =$45 per unit
2)- Dollar sales to earn the target income =Fixed cost+ Target income/Contribution margin ratio
=$562500+$1012500/25%
=$6300000
Contribution margin ratio= (Contribution margin per unit/ Selling price per unit)*100
=($45 per unit/$180 per unit)*100
=25%