Use the following information to answer the following Questions
Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the company has fixed costs that amount to $400,000. Current sales total 16,000 units.
-In order to produce a target profit of $22,000, Narchie's dollar sales must total:
A) $8,440.
B) $21,100.
C) $1,000,000.
D) $1,055,000.
E) None of the answers is correct.

Question

Quizplus · Accepted Answer

To find the required sales to achieve a target profit, use the formula: Required Sales = (Fixed Costs + Target Profit) / Contribution Margin Ratio. The contribution margin ratio is 40% (100% - 60% variable cost). Thus, Required Sales = ($400,000 + $22,000) / 0.40 = $1,055,000.

Use the Following Information to Answer the Following Questions