Question

Target Profit

Forest Company sells a product for $250 per unit. The variable cost is $100 per unit, and fixed costs are $615,000.

Determine (a) the break-even point in sales units and (b) the break-even point in sales units if the company desires a target profit of $239,850.

a. Break-even point in sales units |
units | |

b. Break-even point in sales units if the
company desires a target profit of $239,850 |
units |

Answer #1

(a) The break-even point in sales units and

Selling price (A) |
250 |
100.0% |

Less: Variable cost (B) |
100 |
40.0% |

Contribution margin per unit(C=A-B) |
150 |
60.0% |

Break even point in unit sales

=Fixed cost / Contribution margin per unit

=$615,000 /150

=4100 units

**The break-even point in sales units a= 4,100
units**

(b) The break-even point in sales units if the company desires a target profit of $239,850.

Sales required for target profit of $239,850.

=(Desired profit Fixed cost) / Contribution margi

=(239,850+615,000) /150

=5,699

**The break-even point in sales units if the company
desires a target profit of $239,850. =5,699 units**

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Determine (a) the break-even point in sales units and (b) the
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profit of $50,000.
a. Break-even point in sales units
b. Break-even point in sales units if the
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Target Profit
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b. Break-even point in sales units required
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