Chisholm Co. has a contribution margin ratio of 40% and a breakeven point of $200,000 in sales. If the firm reports net income of $50,000 after taxes of 50%, what were total sales for the year?
A) $450,000
B) $466,667
C) $500,000
D) $700,000

Question

Quizplus · Accepted Answer

Contribution Margin = 40% of SalesBreakeven Point = $200,000Net Income = $50,000Taxes = 50%Sales = (Breakeven Point + Net Income) / Contribution Margin Ratio= ($200,000 + $50,000) / 40%= $250,000 / 0.4= $625,000