Raven Company has a target of earning $70,000 pre-tax income.The contribution margin ratio is 30%.What amount of dollar sales must be achieved to reach the goal if fixed costs are $36,000?

Question

Quizplus · Accepted Answer

The formula to calculate the dollar sales to achieve a target pre-tax income is:

(Target pre-tax income + Fixed costs) / Contribution margin ratio

In this case:

($70,000 + $36,000) / 0.3 = $353,333

Therefore, the correct answer is D, $353,333.

Raven Company Has a Target of Earning $70,000 Pre-Tax Income