## 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