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Super Duper Company sells one product that has a sales price of $25 per unit, variable costs of $20 per unit, and total fixed

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Answer #1

Selling price per unit = $25

Variable cost per unit = $20

Total fixed cost = $250,000

Desired profit = $100,000

Contribution margin per unit = Selling price per unit - Variable cost per unit

= 25-20

= $5

Contribution margin ratio = Contribution margin per unit/ Selling price per unt

= 5/25

= 20%

Sales to get desired profit = ( Total fixed cost + Desired profit)/ Contribution margin ratio

= ( 250,000+100,000)/20%

= 350,000/20%

= $1,750,000

Correct option is A.

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