Moccio Enterprises, Inc., produces and sells a single product whose selling price is $120.00 per unit and whose variable expense is $37.20 per unit. The company's monthly fixed expense is $356,040. Assume the company's target profit is $15,000. The dollar sales to attain that target profit is closest to:
A)$371,040
B)$537,739
C)$701,894
D)$1,196,903

Question

Quizplus · Accepted Answer

The contribution margin per unit can be calculated as:

$120.00 - $37.20 = $82.80

To earn a target profit of $15,000, the company needs to generate:

($356,040 + $15,000) / $82.80 = 4,555.43 units

Multiplying this by the selling price per unit:

4,555.43 x $120.00 = $546,651.60

Therefore, the dollar sales to attain the target profit is closest to $537,739 (option B).