Question

Centennial Company makes electronics. Its sales for 2020 are $1,378,000. Fixed costs are $405,620 and variable costs are $826,800. It sold 2,600 units in the year. Calculate the contribution margin per unit and the contribution margin ratio. (Round contribution margin per unit to 2 decimal places, e.g. 15.20 and contribution margin ratio to 4 decimal places, e.g. 1.4254%.) Contribution margin per unit Contribution margin ratio LINK TO TEXT Assuming a consistent contribution margin ratio, if its desired operating income is $126,500, what would the company need to sell in units and in dollars to achieve this goal? (Round answers to o decimal places, e.g. 125.) In dollars In units Required sales

Answer 1

If it is helpful, please rate the answer and if any doubt arises let me know

	Contribution margin	=	$                 212
	Contribution margin ratio	=	40%
			In dollars	In units
	Required sales	=	$     13,30,300	2,510
	Workings:
	Sales Price per unit (1378000/2600)	=	$                 530
Less:	Variable cost per unit (826800/2600)	=	$                 318
	Contribution margin	=	$                 212
	Contribution margin ratio ($212 / $530)	=	40%
	Fixed cost	=	$       4,05,620
	Target Profit	=	$       1,26,500
	Unit sales required to attain target profit	=	(Fixed cost + Target profit) / Contribution margin ratio
		=	($405620 + $126500) / 40%
		=	$     13,30,300
	Dollar sales required to attain target profit	=	(Fixed cost + Target profit) / Contribution per unit
		=	($405620 + $126500) / $212
		=	2,510