Question

Tropp Corporation sells a product for $10 per unit. The fixed expenses are $420,000 per month and the unit variable expenses are 60% of the selling price. What sales would be necessary in order for Tropp to realize a profit of 10% of sales? (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer: $1,400,000

Explanation:

Given

Selling price per unit $10

Fixed Expenses $4,20,000

Variable expenses 60% of selling price= 10 x 60/100

=$6

Calculation of Profit of 10% on sales

Contribution margin= Selling price - variable cost

=10-6

=4

If NOI is 10%, 60% is VC so Fixed cost must be 30% of sales.

Fixed cost = Sales x 30%

420000= sales x 30/100

Sales = $1,400,000