Question

The Gold company has fixed expenses of $325,00, variable expenses of $5.60 per unit, and a...

The Gold company has fixed expenses of $325,00, variable expenses of $5.60 per unit, and a selling price of $12 per unit. How many units would the company have to sell to make a profit of $75,000 and what is the sales in dollars?

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Answer #1

Required Contribution = Required Profit + Fixed Expense

= $ 75,000 + $ 32,500

= $ 107,500

Contribution Margin Per Unit =

= ($12-$5.60)

= $ 6.40

Sales in units required to make the required profit = Required Contribution / Contribution Margin per unit

= $ 107,500 / $ 6.40

= $ 16,796.875

Sales in dollars required to make the required profit = Sales in units required to make the required profit * Selling price per unit

= $ 16,796.875 * $ 12

= $ 201,562.50

Answer = $ 201,562.50

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