Deines Corporation has fixed costs of $480,000. It has a unit selling price of $6, unit variable cost of $4.4, and a target net income of $1,500,000. Compute the required sales in units to achieve its target net income.
Accepted Solution
A:
Answer:The required sales in units to achieve its target net income is 1,237,500 units.Step-by-step explanation:From the given information it is clear thatFixed cost = $480,000Selling Price = $6 per unitVariable Cost = $4.4 per unitTarget net income = $1,500,000We need to find the required sales in units to achieve its target net income.[tex]Units=\frac{\text{Fixed cost + Target net income}}{\text{Selling Price - Variable Cost}}[/tex][tex]Units=\frac{480000+1500000}{6-4.4}[/tex][tex]Units=\frac{1980000}{1.6}[/tex][tex]Units=1237500[/tex]Therefore the required sales in units to achieve its target net income is 1,237,500 units.