Blanchard company manufactures a signle product that sells for $104 per unit and whose total viarable costs are $78 per unit. The company's annual fixed costs are $369200. Management targets an annual pretax income of $650000. Assume that fixed cost remains at $369200 (1) Compute the unit sales to earn the target income.
(2) Compute the dollar sales to earn the target income.

Instructions are below.

Explanation:

Giving the following information:

Selling price= $104 per unit

Unitary variable cost= $78

Fixed costs= $369,200.

Management targets an annual pretax income of $650,000.

First, we need to calculate the number of units required to reach the objective. We will use the following formula:

Break-even point in units= (fixed costs + desired profit)/ contribution margin per unit

Break-even point in units= (369,200 + 650,000) / (104 - 78)

Break-even point in units= 39,200 units

Now, the sales in dollars required:

Break-even point (dollars)= (fixed costs + desired profit)/ contribution margin ratio

Break-even point (dollars)= 1,019,200 / (26/104)

Break-even point (dollars)= $4,076,800

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