Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. yoda and his jedi knights, have just received a pr

Yoda and his Jedi Knights, have just received a project to produce a new Pink Lightsaber....

Free

50.1K

Verified Solution

Question

Finance

Yoda and his Jedi Knights, have just received a project toproduce a new Pink Lightsaber. The variable cost per unit is at$750, the sales price would be set at twice the VC/unit, and thefixed costs are $1,000,000. The Storm Troopers have agreed thatthey will put up the funds if the project is likely to have anoperating income of $500,000 or more. What amount of sales would beneeded in order to meet this profit goal?

Answer & Explanation Solved by verified expert
3.8 Ratings (665 Votes)

Target sales to achieve such target income is $ 15,00,000 or more.

Working:

Step-1:Calculation of contribution margin ratio
Contribution margin ratio = Contribution margin / Sales
= $                   750 / $    1,500
= 50%
Working:
Sales = Variable cost *2
= 750*2
= $                1,500
Contribution margin = Sales price per unit - Variable cost per unit
= $                1,500 - $        750
= $                   750
Step-2:Calculation of target sales
Target sales = Target contribution margin / Contribution margin ratio
= $       15,00,000 / 50%
= $       30,00,000
Working:
Fixed cost $       10,00,000
Target profit $          5,00,000
Target contribution margin $       15,00,000

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Yoda and his Jedi Knights, have just received a project toproduce a new Pink Lightsaber. The variable cost per unit is at$750, the sales price would be set at twice the VC/unit, and thefixed costs are $1,000,000. The Storm Troopers have agreed thatthey will put up the funds if the project is likely to have anoperating income of $500,000 or more. What amount of sales would beneeded in order to meet this profit goal?

Other questions asked by students

Finance
1.2K views

A stock price is $50 with annual volatility of 20%. Assume a risk-free rate of 6%...

Mechanical Engineering
1.2K views

The electrical conductivity and the electron mobility for copper at room temperature are 6.0 X 107...

Mechanical Engineering
1.2K views

R-134a expands through a throttling device from 900 kPA and 30 oC to -10 oC. a- determine...

Biology
1.2K views

MULTIPLE CHOICE What is the study of the relation of animals and plants to their...

Physics
1.2K views

Cherry red embers in a fireplace are at 960 C and have an exposed area...

Accounting
1.2K views

Courtney Company uses a periodic inventory system. The following data were available: beginning inventory, 1,300...

Accounting
1.2K views

Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on...

Accounting
1.2K views

The owner of a small factory thinks that he will need $28,900 for new equipment...

Accounting
1.2K views

Early in your first audit of Star Corporation, you notice that sales and year-end inventory...

Accounting
1.2K views

Required information [The following information applies to the questions displayed below.] The following...

Accounting
1.2K views

Required information [The following information applies to the questions displayed below.] Wardell Company purchased a...

Finance
1.2K views

LeBron Development Inc. is a U.S. firm evaluating a project in Australia. You have the...