Calculating Required Sales for Desired Profit

What are the required sales if Grant Company desires profit of $60 000?

The required sales for Grant Company to achieve a profit of $60,000 is approximately $900,000.

Answer:

The required sales for Grant Company to achieve a profit of $60,000 is approximately $900,000.

To calculate the required sales for Grant Company to achieve a desired profit of $60,000, we need to consider the fixed costs, variable costs, and the profit target.

Let's assume the required sales to be "X."

The variable costs are given as 40% of sales, which means the variable costs can be expressed as 0.4X.

The total costs can be calculated by adding the fixed costs and variable costs:

Total Costs = Fixed Costs + Variable Costs = $600,000 + 0.4X

To achieve a profit of $60,000, we subtract the profit from the total costs:

Total Costs - Profit = $600,000 + 0.4X - $60,000 = $600,000 + 0.4X - $60,000

To determine the required sales, we set this expression equal to zero and solve for X:

$540,000 + 0.4X = X

0.6X = $540,000

X = $540,000 / 0.6

X ≈ $900,000