Answer:
The company must sell $300,000 to earn a target profit of $90,000.
Explanation:
Contribution margin per unit = Sales price per unit - Variable costs per unit. = $60.00 - $15.00 = $45
Contribution margin ratio = Contribution margin per unit / Selling price per unit = $45 / $65 = 0.75, or 75%
Total Fixed Costs = $135,000
Target profit = $90,000
Sales in dollars to earn the target profit = (Fixed cost + Targeted profit) / Contribution margin ratio = ($135,000 + $90,000) / 75% = $300,000
Therefore, the company must sell $300,000 to earn a target profit of $90,000.
