Upchurch Corporation produces and sells a single product. Data concerning that product appear below: Assume the company's target profit is $12,000. The unit sales to attain that target profit is closest to:
A)3,242 units
B)4,912 units
C)9,535 units
D)5,896 units

Question

Upchurch Corporation produces and sells a single product. Data concerning that product appear below:  Assume the company's target profit is $12,000. The unit sales to attain that target profit is closest to:
A)3,242 units 
B)4,912 units 
C)9,535 units 
D)5,896 units

Quizplus · Accepted Answer

The company's contribution margin per unit is:

Selling price per unit - Variable expenses per unit = $27 - $11 = $16

To reach a target profit of $12,000, we can use the following formula:

Unit sales = (target profit + fixed expenses) ÷ contribution margin per unit

Plugging in the values:

Unit sales = ($12,000 + $47,000) ÷ $16 = 4,912

Therefore, the unit sales to attain the target profit of $12,000 is closest to 4,912 units, which is option B.

Upchurch Corporation Produces and Sells a Single Product