During May XYZ Company sold 9000 units and reported the foll

 During May, XYZ Company sold 9,000 units and reported the following income statement:  Sales ............................  $540,000 Variable costs ...................   216,000 Fixed costs ......................   117,000 Net income .......................  $207,000  Calculate the number of units XYZ Company needed to sell in May in order to earn a target profit equal to 45% of sales.

Let units sold be x.

Variable cost per unit=(216000/9000)=$24

Selling price per unit=($540,000/9000)=$60

Hence target profit t=(60x*45%)=$27x

Hence target Contribution margin=fixed cost+target profits

=(117000+27x)

Contribution margin per unit=Sales-Variable cost

=(60-24)=$36

Hence total contribution margin=$36x

Hence

36x=117000+27x

x=117000/(36-27)

=13000 units.

During May, XYZ Company sold 9,000 units and reported the following income statement: Sales ............................ $540,000 Variable costs ..............

During May XYZ Company sold 9000 units and reported the foll

Solution

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