Chapter 21, Problem 21.11EX

a.

To determine

Target Profit: It refers to the desired amount of profit that a company expects to achieve by the end of an accounting period after it reaches its break-even point. Thus, the company needs to compute the required sales to earn the target profit. The formula to calculate the required sales to earn the target profit is as follows:

$\text{Sales}\left(\text{units}\right)=\frac{\text{Fixed}\text{Costs+Target}\text{Profit}}{\text{Unit}\text{Contribution}\text{Margin}}$

To compute: the anticipated break-even point sales (units).

b.

To determine

To compute: the sales (units) required to realize income from operations of $1,400,000.