Jones Company has fixed costs totaling $48,000 per month, the variable cost per unit is $60, and the selling price per unit is $100. How much revenue must Jones Company generate to earn $96,000 in target profit?

The answer is $360,000

Explanation:

Target profit is the expected amount of profit that the management of a business are expecting to achieve.

Contribution margin per unit is the difference between sales per unit and variable cost per unit.

Fixed cost is the same all through the production.

Contribution margin per unit= $100-$60 = $40

Required sales=

(Fixed cost + target profit) ÷ contribution margin per unit.

($48,000 + $96,000) ÷ $40

=3,600units

The selling price per unit is $100

Therefore, the total revenue is 3,600 x $100

$360,000

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