If the contribution margin ratio is 26%, target operating income is $32,000, and target sales are $200,000, what are total fixed expenses?
A) $52,000
B) $23,077
C) $20,000
D) $8,320

Question

Quizplus · Accepted Answer

The contribution margin ratio is used to determine the contribution margin, which is sales minus variable costs. With a contribution margin ratio of 26%, the contribution margin from $200,000 in sales is $52,000. To find fixed expenses, subtract the target operating income ($32,000) from the contribution margin ($52,000), resulting in $20,000.

If the Contribution Margin Ratio Is 26%, Target Operating Income