Sales = Variable Expenses + Fixed Expenses + Target Operating

question 91

Short Answer

Sales = Variable expenses + Fixed expenses + Target operating income
$4.50Q = $3.00Q + $120,000 + $0
$1.50Q = $120,000
Q = $120,000/$1.50 = 80,000 units
2.80,000 units x $4.50 = $360,000
3.Sales = Variable expenses + Fixed expenses + Target operating income
$4.50Q = $3.00Q + $120,000 + $90,000
$1.50Q = $210,000
Q = $210,000/$1.50 = 140,000 units
4.Margin of safety = Sales - Sales at break-even
= $540,000 - $360,000
= $180,000

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Definitions:

Working Capital Management

The process of managing short-term assets and liabilities to ensure a company operates efficiently.

Dealer

A person or firm in the business of buying and selling securities for their own account, rather than for customers.

Commodity

Basic goods used in commerce that are interchangeable with other goods of the same type.

Original Issuer

The entity that first creates and offers securities or financial instruments to the public, such as bonds or stocks.