The company sells a single product for $57

Management Mar 12, 2021

The company sells a single product for $57. Variable costs are 58% of the selling price. Fixed costs are $446,344 and the company currently sales 8,826 units. How many units must be sold to produce a target price of $73?

Expert Solution

Computation of Number of Units to be sold to produce a target price of $73:

Contribution margin per unit = $57 * (1-58%) = $23.94

Units to be sold = (Fixed costs + Target profit) /Contribution margin per unit

= ($446,344+$73)/23.94

Units to be sold = 18,647 units

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