Homework Answers
a)
| Revenues (€1,210,000/100,000*120,000) | 1,452,000 |
| Less: Manufacturing variable costs (310,000/100,000*120,000) | 372,000 |
| Less: Non manufacturing variable cost (100,000/100,000*120,000) | 120,000 |
| Contribution margin | 960,000 |
| Less: Manufacturing fixed cost | 90,000 |
| Less: Non manufacturing fixed cost | 200,000 |
| Operating income | 670,000 |
| Less: Income tax (670,000*40%) | 268,000 |
| Net income | 402,000 |
b)
| Selling price per unit (1,210,000/100,000)*94%) | 11.374 |
| Variable cost per unit (310,000+100,000)/100,000)+2) | 6.100 |
| Contribution margin per unit | 5.274 |
| Target sales = ((target profit/60%) + Fixed costs) / Contribution margin ratio |
| Target sales = ((390,000/60%)+10,000+90,000+200,000) / 5.274 |
| Target sales = 180,129 Units |
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