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Unformatted text preview: many units must be sold to achieve this goal? Required: Compute the amount of sales in dollars and in units using the Equation Approach and the Contribution Margin Approach. Problem Equation Approach Sales = Variable Expenses + Fixed Expenses + Profits $10Q = $2Q + $30,000 + $24,000 $8Q = $54,000 Q = 6,750 units Total sales = 6,750 * $10 = $67,50 The Contribution Margin Approach Solution Unit sales to attain = (Fixed Expenses + Target Profit) the target profit Unit Contribution Margin Q = ($30,000 + $24,000) ($10-$2) Q = $54,000 $8 Q = 6,750 units The Contribution Margin Approach Sales to attain = (Fixed Expenses + Target Profit) Target profit Contribution Margin Ratio Sales = ($30,000 + $24,000) ($8/$10) Sales = ($54,000) .80 Sales = $67,500...
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- Spring '11
- Managerial Accounting