Course BUS 210Introd X McGrawHill Chapter 3 Homework C etom

Course: BUS 210-Introd X McGraw-Hill Chapter 3 Homework C | eto.miheducation.com/hm.tpx?--0.5444525719366083-1516844683224 Durant Manufacturers has performed extensive studies on its costs and production and estimates the following annual costs based on 166,000 units (produced and sold) Costs (166,000 Direct material Direct labor Manufacturing overhead Selling, general, and administrative $ 298,000 261,000 222,000 135,000 Total $916,000 Required: (Round your answer to 2 decimal places ing price per unit (b)Compute Durant\'s dollar sales that will yield a projected 23 percent profit on sales, assuming variable costs per unit are 52 percent of the selling price per unit and foxed costs are $540,000 (e) Management believes that a selling price of $7 40 per unit is reasonable given current market conditions. How many units must Durant sell to generate the revenues (dollar sales) determined in requirement (b)? r of units

Solution

a.

Sales per unit = (Total cost + Profit)/No. of units

                          = ($ 916,000 + $ 793,800)/166,000

                          = $ 1,709,800/ 166,000

                          = $ 10.30

b.

Sales = Cost /[1- M]

Cost = Variable cost + Fixed cost

M = Profit margin %

Sales = Variable cost + Fixed cost /[1- 23%]

          = (Sales x 52% + $ 540,000) /0.77

Sales x 0.77 = Sales x 0.52+ $ 540,000

Sales x (0.77 – 0.52) = $ 540,000

Sales x 0.25 = $ 540,000

Sales = $ 540,000/0.25 = $ 2,160,000

c.

Target sales Revenue = $ 2,160,000

Sales per unit = $ 7.40

Target sales units = Target sales Revenue/ Sales per unit

                                = $ 2,160,000/$ 7.40

                                = 291891.89 or 291,892 units