Rothe company manufactures and sells a single product that it sells for $200 per unit and has a contribution margin ratio of 25%. the company's fixed costs are $43,000. if rothe desires a monthly target operating profit equal to 20% of sales, sales will have to be (rounded) :

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Business

Russell Clarke

24 October, 14:54

Rothe company manufactures and sells a single product that it sells for $200 per unit and has a contribution margin ratio of 25%. the company's fixed costs are $43,000. if rothe desires a monthly target operating profit equal to 20% of sales, sales will have to be (rounded) :

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Lauren Spencer · Answer 1

Selling price=200 per unit

CM ratio = 0.25

Fixed expenses=43000

target profit=0.2

Dollar sales to attain target profit=X

X = (0.2X+43000) : 0.25

Cross multiplication

0.25X=0.2X+43000

Solve for X

0.25X-0.2X=43000

0.05X=43000

X=43000/0.05

X=860000

Unit sales=Dollar sales:selling price

Unit sales=860,000:200

Unit sales=4,300 units ... answer