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The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. Compute...

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Accounting

The budgeted income statement presented below is for BurkettCorporation for the coming fiscal year. Compute the number of unitsthat must be sold in order to achieve a target pretax income of$218,000.

Sales (58,000 units) $ 986,000

Costs:
Direct materials $ 160,800
Direct labor 240,800
Fixed factory overhead 104,000
Variable factory overhead 150,800
Fixed marketing costs 110,800
Variable marketing costs 50,800 / 818,000
Pretax income $ 168,000

  • 32,545.

  • 134,970.

  • 65,576.

  • 50,800.

  • 172,394.

Answer & Explanation Solved by verified expert
3.8 Ratings (349 Votes)

The number of units that must be sold in order to achieve a target pretax income of $218,000 = [Fixed cost + Required pre-tax income]/Contribution Margin per unit
Calculation of contribution Margin per unit
Per Unit
Selling price [$986000/58000 units] $17.00
Less : Variable cost
- Direct Materials $2.77
- Direct Labor $4.15
- Variable Factory overheads $2.60
- Variable Marketing cost $0.88
Contribution Margin per unit $6.60
Total Fixed cost
Fixed factory overhead $104,000.00
Fixed marketing costs $110,800.00
Total Fixed cost $214,800.00
The number of units that must be sold in order to achieve a target pretax income of $218,000 = [$214800 + $218000]/$6.60 = 65576 units.

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