Show all supporting computations 1 How many units would Hurs

Show all supporting computations.

1. How many units would Hurst Co. need to sell to make a target profit of $16,000? What would their sales dollars be at this level?

$137 Units in beginning inventory 3,000 2,900 100 Units in ending inventory Variable costs per ui it Direct materials Direct labor.. Variable manufacturing overhead Variable selling and administrative $40 $53 $6 $9 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative $69.000 $5,800

Solution

Target Units to be sold                 3,131 Target Sales dollar $ 4,28,952 Working: Step-1:Calculation of Total fixed expense Fixed manufacturing Overhead $           69,000 Fixed Selling and administrative $             5,800 Total $           74,800 Step-2:Calculation of total variable cost Direct Materials $                   40 Direct Labor $                   53 Variable Manufacturing Overhead $                     6 Variable Selling and adinistrative $                     9 Total $                 108 Step-3:Calculation of contribution margin per unit Selling price per unit $                 137 Less variable cost per unit $                 108 Contribution Margin per unit $                   29 Step-4:Calculation of Target units to be sold Fixed Expense $           74,800 Add target profit $           16,000 Target Contribution Margin $           90,800 /Contributioin margin per unit $                   29 Target Units to be sold                 3,131 Step-5:Contribution Margin Ratio Contribution Margin Ratio = Contribution Margin / Sales = $                   29 / $        137 = 21.17% Step-6:Calculation of Target sales in dollars Target Contributon Margin $           90,800 /Contribution margin ratio 21.17% Target Sales in dollars $       4,28,952