The Formula for Target Units Is

question 22

Multiple Choice

The formula for target units is:

• A)(Total fixed costs + Target profit)/Contribution margin ratio
• B)(Total variable costs + Total fixed costs)/Contribution margin ratio
• C)(Total fixed costs + Target profit)/Unit contribution margin
• D)(Total variable costs + Total fixed costs)/Unit contribution margin

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Definitions:

Factory Overhead

All indirect costs associated with manufacturing, such as indirect labor, maintenance, and utilities, that cannot be directly traced to specific units produced.

Manufacturing Costs

Expenses directly related to the production of goods, including direct materials, direct labor, and manufacturing overhead.

Work in Process Inventory

Goods partially completed during the manufacturing process, including labor, raw materials, and overhead costs.

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services and are a component of the finished product.