**Question:**Ferkil Corporation manufactures a single product that has a selling price of $20.00 per unit. Fixed expenses total $63,000 per year, and the company must sell 9,000 units to break even. If the company has a target profit of $17,500, sales in units must be:**Multiple Choice:**- 9,875 units- 11,500 units- 12,150 units- 10,682 units**Explanation for Educational Website:**This problem involves understanding how to calculate the number of units required to achieve a specific profit target in a cost-volume-profit analysis. Given the fixed expenses, selling price per unit, and the break-even point, you need to determine the required sales units for a target profit of $17,500.The approach involves calculating the contribution margin per unit, determining the total contribution margin needed to cover both fixed expenses and the target profit, and finally dividing by the contribution margin per unit to find the necessary sales volume in units.

SP 20 Fixed cost 63000 Break even units 9000 Target profit 17500 Target sale ?…

Answered: 12,150 units 10,682 units

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2CE

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SP	20
Fixed cost	63000
Break even units	9000
Target profit	17500
Target sale	?


Break even units=	Fixed cost/contribution per unit

Contribution per unit=	Fixed cost/break even units
=	63000/9000
	7