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BOBBI PINS, Inc., sells several products. Information of average revenue and costs is as follows: Selling...

BOBBI PINS, Inc., sells several products. Information of average revenue and costs is as follows: Selling Price/ Unit = € 20.00 Variable Costs / Unit: Direct Material= €4.00; Direct Labor= €1.60 ; MOH= €0.40 ; Selling Costs= €2.00 Annual Fixed Costs = € 96,000 The revenues that the company must earn annually to make a profit of €144,000 are ________.

Seleccione una: a. € 450,000 b. € 425,000 c. € 400,000 d. € 378,000

Business   Accounting   
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Answer #1

Answer:

Desired Sales revenue = {(Fixed cost + Desired profit) / Contribution per unit} x Selling price per unit

= {(€96,000 + €144,000) / €12)} x €20

= €400,000

Accordingly, Option (c) i.e €400,000 is the correct answer.

Notes:

Determination of Contribution per Unit

Particulars Amount
Selling price per unit €20.00
Less: Variable costs
Direct material per unit €4.00
Direct labor per unit €1.60
Manufacturing Overhead per unit €0.40
Selling cost per unit €2.00
Total Variable costs €8.00
Contribution per unit €12.00
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