how many units must be sold to achieve a target profit of $5,000? course hero

How many items must a company sell to achieve its profit?

The equation has given us our answer. If Company A sells less than 10,000 units, it will make a loss. If it sells exactly 10,000 units it will break-even, and if it sells more than 10,000 units, it will make a profit.

How do you calculate sales per unit?

To calculate the required sales level, the targeted income is added to fixed costs, and the total is divided by the contribution margin ratio to determine required sales dollars, or the total is divided by contribution margin per unit to determine the required sales level in units.

How do you calculate dollar sales?

To calculate the break-even point in units use the formula: Break-Even point (units) = Fixed Costs ÷ (Sales price per unit – Variable costs per unit) or in sales dollars using the formula: Break-Even point (sales dollars) = Fixed Costs ÷ Contribution Margin.

What is a target profit pricing?

As the term suggests, target profit pricing is designed to determine how many units we will need to sell to both cover costs AND achieve a set profit. In some firms, marketers are allocated a profit contribution goal/target for the year, and they will use this approach to estimate the required sales volume.

What is break even sales formula?

To calculate break even sales, divide all fixed expenses by the average contribution margin percentage. Contribution margin is sales minus all variable expenses, expressed as a percentage. The formula is: Fixed expenses ÷ Contribution margin percentage = Break even sales.

How do you calculate target cost per unit?

Target cost per unit is calculated or determined by subtracting the target operating profit on a per unit basis from the total target price.

What does profit per unit mean?

Per-unit profit is how much profit we make per unit of sale. Per-unit profit = Profits/Units sold. The marginal revenue curve shows the additional revenue gained from selling one more unit.