Thursday, 1 May 2014

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. Unit sales to attain 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



Problem 6-202 [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