Question

The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. Compute the number of units that must be sold in order to achieve a target pretax income of $167,400.

Sales (44,000 units) $968,000

Costs:

Direct materials $183,500

Direct labor 241,900

Fixed factory overhead 109,500

Variable factory overhead 151,900

Fixed marketing costs 111,900

Variable marketing costs 51,900 850,600

Pretax income $117,400

Answer 1

Answer:

50,494 units

Explanation:

The sales that must be achieved in order to realize a pretax profit of $167,400 is the  total  fixed costs plus target pretax profit all divided by contribution per unit

Total fixed costs=fixed factory overhead+fixed marketing costs=$109,500+$111,900=$221,400.00  

Contribution per unit= sales price per unit-variable cost per unit

sales price per unit=$968,000/44000=$22

variable cost per unit=($183,500+$241,900+$151,900+$51900)/44,000=$14.30 Contribution per unit=$22-$14.30 =$7.70

target sales units=($221,400+$167,400)/$7.70= 50,494 units