Problem 6202 [LO5]
Hounshell Corporation produces and
sells a single product. Data concerning that product appear below:

Selling price per unit

$

123.00

Variable expense per
unit

$

49.60

Fixed expense per
month

$

265,580

Required:
a.

Assume the company’s monthly
target profit is $20,680. Determine the unit sales to attain that target
profit.

units

b.

Assume the company’s monthly
target profit is $6,460. Determine the dollar sales to attain that target
profit. (Round your answer to the nearest dollar
amount. Omit the "$" sign in your response.)

Dollar sales to attain
target profit

$

Explanation:
Per
Unit

Percent
of Sales 

Selling price per unit

$

123.00

100%

Variable expense per
unit

49.60

40%


Contribution margin
per unit and CM ratio

$

73.40

60%

a.

Unit sales to attain target profit
= (Target profit + Fixed expenses) / Unit CM = ($265,580 +
$20,680)/$73.40 = 3,900

b.

Dollar sales to attain target
profit = (Target profit + Fixed expenses) / CM ratio = ($265,580 +
$6,460)/0.60 = $453,400
