Question

Jordan Company incurs annual fixed costs of $145,600. Variable costs for Jordan's product are $27.00 per unit, and the sales price is $45.00 per unit. Jordan desires to earn an annual profit of $56,000. Required Use the contribution margin ratio approach to determine the sales volume in dollars and units required to earn the desired profit. (Do not round intermediate calculations. Round your final answers to the nearest whole number.) Sales in dollars Sales volume in units

Answer 1

Target sales in Dollars = (Fixed expenses + target profit) / contribution margin ratio

Target sales in Dollars = ($145,600 + $56,000) / (($45-$27)/$45)

Target sales in Dollars = $504,000

Target sales in Units = (Fixed expenses + target profit) / contribution margin per unit

Target sales in Units = ($145,600 + $56,000) / ($45-$27)

Target sales in Units = 11,200

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