ACCT 212 - Target profit analysis

ACCT 212 - Target profit analysis - Target profit analysis...

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Target profit analysis 1) Fixed: 40,000 Breakeven ? Target profit: 6,000 Contribution margin: $80/unit 40,000 + 6,000 = 46,000/80 = 575 units 2) Fixed: 40,000 Target profit: 8,000 40,000 + 8,000/80 = 600 units PROFIT = Unit CM x Q – Fixed Expenses 3) Unit CM: 25 – 15
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Unformatted text preview: Fixed: 8,500 0 = (25-15) x Q – 8500 Sales (budget in units) 25,000 0 = 10 x Q – 8500 Breakeven sales 21,250 10Q = 8500 Margin of Safety 3750 Q = 8500/10 Q = 85 units Degree of operating leverage: contribution margin/net operating income...
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