To Determine the Number of Units Needed to Earn a Target

question 74

True/False

To determine the number of units needed to earn a target profit,divide the target contribution margin by the contribution margin per unit.Divide total fixed costs plus profit by the contribution margin per unit.

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Definitions:

GAAP

Generally Accepted Accounting Principles, a set of accounting standards and procedures used in the United States to govern financial reporting.

Current Cost

The cost that would be incurred to replace an asset or to purchase an equivalent asset at the current time.

Management Discretion

The degree of flexibility and judgement allowed to managers in making decisions and choices impacting the company's operations and performance.

FIFO

An inventory valuation method where the first items placed into inventory are the first ones sold (First In, First Out).