Question

# Target Profit Forest Company sells a product for \$250 per unit. The variable cost is \$100...

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

(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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