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26 March, 00:52

Opal Company manufactures a single product that it sells for $75 per unit and has a contribution margin ratio of 35%. The company's fixed costs are $45,000. If Opal desires a monthly target operating profit equal to 15% of sales, sales will have to be (rounded) :

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  1. 26 March, 01:30
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    3,000 units

    Explanation:

    The computation of the sales units is shown below:

    As We know that

    Operating Profit = Contribution Margin - Fixed Costs

    15% of sales = 35% of sales - $45,000

    20% of sales = $45,000

    So, the sales is

    = $45,000 : 0.20

    = $225,000

    Now the sales unit would be

    = Sales : Selling price per unit

    = $225,000 : $75 per unit

    = 3,000 units
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