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The Units Sales for Desired pretax Profit calculator computes the number of units needed to be sold to achieve a pretax profit based on the fixed cost and the contribution margin per unit sale.
INSTRUCTIONS: Choose units and enter the following:
-
( FC) Fixed Cost
-
(BTP) Before Tax Profit Goal
- (CMP) Contribution Margin Per Unit
Unit Sales to Achieve Desired Pre-tax Profit (US): The number of unit sales needed to achieve pre-tax profit goal
The Math / Science
The sales dollars desired after-tax profit can be attained by adding the fixed costs to the before tax-profit and dividing this by the company's contribution margin ratio. The formula for Sales Dollars Desired After-tax Profit is:
US = (FC + BTP)/CMP
where:
- US = Unit Sales to Achieve Desired Pretax Profit
- FC = Fixed Cost
- BTP = Before Tax Profit
- CMP = Contribution Margin Per Unit
Target Profit Calculators
Resource:
- Dopson, Lea R., and David K. Hayes. Managerial Accounting for the Hospitality Industry. Hoboken, NJ: Wiley, 2009. Print.
