# Target sales volume

dumutroba
AAT Student, AATQB Posts:

**242**
Can anyone break it down to me how you calculate the target sales volume of 38793 at the bottom?

Many thanks

Many thanks

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## Comments

24Targeted fixed cost per unit is £11.60 and since fixed costs (in total) remained as before (£450,000):

£450,000/£11.60 = 38793.10345 = 38793Let me know if you want me to break it down further

A

242Much appreciated

AAT Level 3. 2018 Distinction

AAT Level 4. 2019 FSLC 100% MABU 93% MADC 82% PDSY 80%

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41Can you please explain where the £450,000 came from. I am revising at the moment and stuck on the same question just the task has different figures to this one.

Thank you

242Annual costs expected to be 450000

Not sure where is it on your task though

Apply a screenshot

AAT Level 3. 2018 Distinction

AAT Level 4. 2019 FSLC 100% MABU 93% MADC 82% PDSY 80%

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41thank you for your help

242All cost not directly related to production are fixed, unless they are specifically named as such, as the fixed manufacturing costs in this case

AAT Level 3. 2018 Distinction

AAT Level 4. 2019 FSLC 100% MABU 93% MADC 82% PDSY 80%

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4117on the Osbourne question...

173I know it should be simple but struggling with this one for some reason.

53Total anticipated sales revenue will be £18.00 x 20,000 units = £360,000

Target total operating profit will be £360,000 x 25% = 90,000

Target total costs will be £360,000 - £90,000 = £270,000

Target cost per unit (to 2 decimal places) will be £270,000 / 20,000 units = £13.50

For part B you follow the same principles:

Target operating profit will be 17.00 x 25% = £4.25

Target total cost per unit will be £17.00 - £4.25 - £12.75

Target fixed costs will be £12.75 - £7.00 = £5.75

(in case you need to enter the figure for manufacturing costs in any other practice papers, use the £140,000 (provided in the table at the top under variable manufacturing costs) and divide it by the number of units - so £140,000 / 20,000 units = £7)

For the last part, use the figures given in the table at the top.

You need to know the total costs for the production of 20,000 so 65,000 + 140,000 + 45,000 + 35,000 = £285,000

Less the variable costs (also in the table) will be £285,000 - £140,000 = £145,000 fixed costs

You need to divide the fixed costs by the number of units so £145,000 / 20,000 = £7.25 per unit

You can now complete the calculation by taking £145,000 / 5.75 (from first part of answer = 25217.39 rounded to 25217 as you need to show full units not parts of units.

Hope that helps.