How much sales are required to earn a target income of $240000 if total fixed costs are $300000 and the contribution margin ratio is 40%?
A) $900000
B) $600000
C) $1350000
D) $990000

Question

Quizplus · Accepted Answer

Target income = (Total fixed costs + Target income)/Contribution margin ratio
$240000 = ($300000 + Sales)/40%
Sales = $900000
Therefore, the required sales to earn a target income of $240000 is $900000.

How Much Sales Are Required to Earn a Target Income