Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Given the following information: Selling price per unit = $20, Variable cost per unit = $12, Fixed costs = $80, what are the unit sales required to attain a target profit of $120?

25 units

20 units

10 units

30 units

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Verified step by step guidance

Step 1: Understand the formula for calculating the required unit sales to achieve a target profit. The formula is: $ \text{Required Unit Sales} = \frac{\text{Fixed Costs} + \text{Target Profit}}{\text{Selling Price per Unit} - \text{Variable Cost per Unit}} $.

Step 2: Identify the given values from the problem: Fixed Costs = $80, Target Profit = $120, Selling Price per Unit = $20, and Variable Cost per Unit = $12.

Step 3: Calculate the contribution margin per unit, which is the difference between the Selling Price per Unit and the Variable Cost per Unit. Use the formula: $ \text{Contribution Margin per Unit} = \text{Selling Price per Unit} - \text{Variable Cost per Unit} $.

Step 4: Substitute the given values into the formula for Required Unit Sales: $ \text{Required Unit Sales} = \frac{80 + 120}{20 - 12} $.

Step 5: Simplify the numerator (Fixed Costs + Target Profit) and the denominator (Contribution Margin per Unit) to calculate the Required Unit Sales. This will give you the number of units needed to achieve the target profit.