EXERCISE 6-17 (30 MINUTES)

6. a. Sales = Variable expenses + Fixed expenses + Profits

$25Q = $9Q + $420,000 + $90,000

$16Q = $510,000

Q = $510,000 ÷ $16 per ball

Q = 31,875 balls

Alternative solution:

Unit sales to attain Fixed expenses + Target profit target profit = Unit contribution margin

$420,000 + $90,000

= $16 per ball =31,875 balls

Thus, the company will have to sell 1,875 more balls (31,875 –