Respuesta :
Using the formula method, the unit sales that are required to earn a target profit of 15,000 is 1625 units.
Given information:
selling price = $120 per unit
variable expense = 80 per unit
monthly fixed expenses = $50,000
And target profit = $15,000
The contribution margin per unit is to be calculated first for the formula method.
Therefore, contribution margin per unit = selling price per unit - variable expense per unit
Substituting the values in the above formula we get,
contribution margin per unit = $120 - $80
= $40 per unit
Using the formula method to calculate the units sold to achieve target profit is,
Units sold for profit = (fixed expenses + target profit)/contribution margin per unit
Substituting the values in the above formula we get,
Units sold for profit = ($50000 + 15000)/$40
= $65,000/$40
= 1625 units
Hence, 1625 units should be sold to achieve the target profit of $15,000.
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