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Lexi Inc. has a single product, whose selling price is $250 and whose variable cost is 72% of sales price. The company’s monthly fixed expenses are $60,000. Assume a 40% tax rate.    Required: 1. Using the equation method, compute the unit sales that are required to earn a target before-tax profit of $20,000. (Round your intermediate calculations and round up your final answer to the next whole number.)2. Using the contribution margin approach, compute the dollar sales that are required to earn a target before-tax profit of $25,000. (Round your intermediate calculations to nearest whole dollar amount.)

Lexi Inc. has a single product, whose selling price is $250 and whose variable cost is 72% of sales price. The company’s monthly fixed expenses are $60,000. Assume a 40% tax rate.    Required: 1. Using the equation method, compute the unit sales that are required to earn a target before-tax profit of $20,000. (Round your intermediate calculations and round up your final answer to the next whole number.)2. Using the contribution margin approach, compute the dollar sales that are required to earn a target before-tax profit of $25,000. (Round your intermediate calculations to nearest whole dollar amount.)

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 37P
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Lexi Inc. has a single product, whose selling price is $250 and whose variable cost is 72% of sales price. The company’s monthly fixed expenses are $60,000. Assume a 40% tax rate.

  

Required:

1. Using the equation method, compute the unit sales that are required to earn a target before-tax profit of $20,000. (Round your intermediate calculations and round up your final answer to the next whole number.)2. Using the contribution margin approach, compute the dollar sales that are required to earn a target before-tax profit of $25,000. (Round your intermediate calculations to nearest whole dollar amount.)

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