Miguel Manufacturing has fixed costs of $2,500,000 and variable costs are 40% of sales.What are the required sales if Montoya desires an operating income of $250,000?

Question

Quizplus · Accepted Answer

To achieve a desired operating income, we can use the formula: Required Sales = (Fixed Costs + Desired Operating Income) / (1 - Variable Cost Percentage). Plugging in the values: Required Sales = ($2,500,000 + $250,000) / (1 - 0.40) = $2,750,000 / 0.60 = $4,583,333.

Miguel Manufacturing Has Fixed Costs of $2,500,000 and Variable Costs