Target profit has been set at $45 million for the first year as well as recouping the corporation’s $10,500,000 R&D costs. How many computers will they need to sell in the first year to meet their goal?
Price to retailers; $4,500
Fixed costs: $4.5 million
Variable costs: $1050 per computer
| Units at target price = | Fixed cost + Target Income | |||||||||
| Contribution margin per Unit | ||||||||||
| Numerator as follows | Fixed Cost + R&D Cost + Target Profit | |||||||||
| $4.5 + $10.5 + $ 45 Millions = $60 Million | or | $ 60,000,000.00 | ||||||||
| Contribution Margin per Unit = | Selling price - Variable cost | |||||||||
| $4500-$1050 | $ 3,450.00 | |||||||||
| Computers they need to sell in the first year to meet their goal as follows | ||||||||||
| 60 Million/$3450 | or | $60000000/$3450 | 17,391.30 | or 17391 Units to sell | ||||||
Get Answers For Free
Most questions answered within 1 hours.