Question

Blanchard Company manufactures a single product that sells for $280 per unit and whose total variable costs are $224 per unit. The company's annual fixed costs are $879,200. Management targets an annual pretax income of $1,400,000. Assume that fixed costs remain at $879,200.

1) Compute the unit sales to earn the target income.

2) Compute the dellar sales to earn the target income?

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Blanchard Company manufactures a single product that sells for $280 per unit and whose total variable costs are $224 per unit. The company's annual fixed costs are $879,200. Management targets an annual pretax income of $1,400,000. Assume that fixed costs remain at $879,200.

A) Break-even point= (fixed costs + profit)/ contribution margin

Break-even point= (879,200 + 1,400,000)/(280 - 224)= 40,700 units

B) Break-even point (dollars)= (fixed costs + profit)/ contribution margin ratio

Break-even point (dollars)= 2,279,200/ (56/280)= $11,396,000