Respuesta :
The worxs company wants to achieve a profit of $126,000. In order to achieve their target profit without increasing the selling price, the company will need to: increase 250 units
Calculating the problem:
Given : Target profit = $126,000
Selling price = $72 per unit
Variable cost = $32 per unit
Fixed costs = $84,000
Current sale = 5,000 units
Contribution margin per unit = Selling price per unit - Variable cost per unit
= 72 - 32
= $40
Number of units to be sold to earn the target profit = (Fixed costs + Target profit)/Contribution margin per unit
= (84,000 + 126,000)/40
= 210,000/40
= 5,250
Sales must be increased by 250 units (5,250 - 5,000) to achieve the target profit.
What is the target profit?
An investor's predetermined price point at which they will exit a trade for a positive gain is called a profit target. Investors and technical traders use a variety of trading strategies to manage risk, and profit targets can be set using a variety of methods or criteria.
We can determine, through target profit analysis, the amount of dollar sales a company will need to reach a certain profit point. The CVP analysis is primarily used for this purpose. When the fundamental information is determined, it can offer a lot of knowledge and help in arranging.
Contribution margin:
The selling price per unit less the variable cost per unit is the contribution margin, or dollar contribution per unit. "Contribution" refers to the portion of sales revenue that contributes to the coverage of fixed costs and is not consumed by variable costs.
Learn more about contribution margin:
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