Managerial Accounting (15th Edition)

Published by McGraw-Hill Education
ISBN 10: 007802563X
ISBN 13: 978-0-07802-563-1

Chapter 5 - Cost-Volume-Profit Relationships - Exercises - Page 219: Exercise 5-7

Answer

(a) 1500 (b) 1625

Work Step by Step

a. Profit = UNIT CM * Q - Fixed expense => $10000=(120-80)Q - 50000$ => $Q= \frac{60000}{40}=1500$ units b. Sales in unit = (Target profit + Fixed cost) / (Price per unit - Variable cost per unit) = $\frac{15000 + 50000}{120-80}=1625$
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