Fowler Manufacturing Company has a fixed cost of $225,000 for the production of tubes.Estimated sales are 150,000 units.A before tax profit of $125,000 is desired by the controller.If the tubes sell for $5 each,what unit contribution margin is required to attain the profit target?
A)$3.00.
B)$2.33.
C)$1.47.
D)$.90.

Question

Quizplus · Accepted Answer

To calculate the unit contribution margin required to attain the profit target, we need to use the following formula:

Unit Contribution Margin = (Fixed Costs + Target Profit) / Number of Units

Substituting the given values, we get:

Unit Contribution Margin = ($225,000 + $125,000) / 150,000 units
Unit Contribution Margin = $350,000 / 150,000 units
Unit Contribution Margin = $2.33 per unit

Therefore, the answer is B) $2.33.

Fowler Manufacturing Company Has a Fixed Cost of $225,000 for the Production