Alfa Co. produces a product that has a variable cost of $3.00 per unit. The company's fixed costs are $30,000. The product is sold for $5.00 per unit and the company desires to earn a target profit of $20,000. What is the amount of sales that will be necessary to earn the desired profit

To calculate the number of units to be sold and the sales dollars required, we will use the break-even point analysis. The following formulas are required:

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (30,000 + 20,000) / (5 - 3)

Break-even point in units= 25,000

Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio

Break-even point (dollars)= 50,000 / (2/5)

Break-even point (dollars)= $125,000

abiolataiwo2015 abiolataiwo2015 · Answer 2 · 2022-03-15T12:27:14+01:00

The amount of sales that will be necessary to earn the desired profit is $125,000.

Desired profit

Contribution margin ratio:

Contribution margin ratio=5-3/5

Contribution margin ratio=2/5

Contribution margin ratio=0.4

Desired profit= (Fixed costs + Target profit) / Contribution margin ratio

Desired profit=(30,000 + 20,000) / 0.4

Desired profit=50,000/0.5

Desired profit=$125,000

Inconclusion the amount of sales that will be necessary to earn the desired profit is $125,000.

Learn more about desired profit here:https://brainly.com/question/26085685