Excerpts from a cost-volume-profit analysis indicate fixed costs of $30,000,a variable cost per unit of $36,a selling price of $60,and a sales level of $125,000.The targeted level of profit must be
A)$20,000.
B)$50,000.
C)$95,000.
D)$75,000.

Question

Quizplus · Accepted Answer

The contribution margin per unit is $60 - $36 = $24. To find the number of units sold, divide the sales level by the selling price per unit: $125,000 / $60 = 2083.33 units. The total contribution margin is 2083.33 units * $24 = $50,000. Subtract fixed costs of $30,000 from the total contribution margin to find the profit: $50,000 - $30,000 = $20,000.

Excerpts from a Cost-Volume-Profit Analysis Indicate Fixed Costs of $30,000,a