Gokey Company has a contribution-margin ratio of 0.30.Targeted net income is $76,800 and targeted sales volume in dollars is $480,000.What are total fixed costs?
A) $23,000
B) $44,160
C) $67,200
D) $144,000

Question

Quizplus · Accepted Answer

The contribution margin ratio is 0.30, meaning 30% of sales contribute to covering fixed costs and profit. With targeted sales of $480,000, the contribution margin is $144,000 (0.30 * $480,000). Subtracting the targeted net income of $76,800 from the contribution margin gives total fixed costs of $67,200 ($144,000 - $76,800).

Gokey Company Has a Contribution-Margin Ratio of 0