Target Profit Using Contribution Margin Steps:

• Variable cost per unit: ($90,000 manufacturing +$60,000 selling) / 6,000 units = $25.
• Contribution margin per unit: $40 selling price -$25 variable cost = $15.
• Total fixed costs: $60,000 manufacturing +$10,000 administrative = $70,000.
• Required units: ($70,000 fixed +$5,000 target profit) / $15 contribution = 5,000 units. Why D is correct:
• The CVP formula units = (fixed costs + target profit) / contribution margin per unit equals 5,000, achieving exactly $5,000 profit. Why the others are wrong:
• A: 3,900 units gives $58,500 contribution, resulting in -$11,500 profit.
• B: 4,125 units gives $61,875 contribution, resulting in -$8,125 profit.
• C: 4,800 units gives $72,000 contribution, resulting in -$3,000 profit. Final answer: D