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Selling price per unit is forty five dollars ; Variable cost per unit is twenty five dollars ; Total fixed cost is two hundred and twenty five thousand dollars .
And the corporation is planning to accomplish net profit after tax one hundred and eighty thousand dollars . And the tax rate is twenty five percent .
Sales Volume to be achieved 16240
selling cost 45 730800
variable cost 25 406000
fixed cost 225000 COGS 631000
Tax 112500
Sales Revenue before tax 743500
Profit after tax ` 180000
To accomplish the required net profit you should sell 23250 unit.
and here's how to calculate it :
you need to accomplish net profit 180000 after taxes
Taxes =25 % from total profit
Total profit = 180000 / 75 %= 240000
Add the fixed cost = 225000
Cost for selling unites before variable cost = 240000 + 225000 = 465000
Divide this cost by net between selling price/unit and variable cost/unit (45-25=20) = 465000 / 20 = 23250 Unit
Total variable cost = 23250 * 25 = 581250
Total fixed cost = 225000
Total cost = 581250 + 225000 = 806250
and here's the result
Sales = 23250 * 45 = 1046250
Total cost = 806250
Profit before taxes =1046250 - 806250 = 240000
Taxes = 240000 * 25 % = 60000
Net profit after taxes = 240000 - 60000 = 180000
Formula to arrive the number of units to be sold with a predetermined profit is:
Profit to be acheived + fixed cost/ contribution per unit.
Profit before tax expected : 240000 (180000/75%)
Fixed cost: 250000
Units to be sold = 24500 ((240000+250000)/(45-25))
Total Sales volume is 18450 Qty. Total Contribution (FC+VC) is $ 3,69,000/-
so total sales volume will be 18450.
