How much sales are required to earn a target income of $160,000 if total fixed costs are $200,000 and the contribution margin ratio is 40%?
A)$600,000
B)$400,000
C)$900,000
D)$660,000

Question

Quizplus · Accepted Answer

To find the required sales to achieve a target income, use the formula: Required Sales = (Fixed Costs + Target Income) / Contribution Margin Ratio. Plugging in the values: Required Sales = ($200,000 + $160,000) / 0.40 = $900,000.

How Much Sales Are Required to Earn a Target Income