For its most recent fiscal year,a firm reported that its contribution margin was equal to 40 percent of sales and that its net income amounted to 10 percent of sales.If its fixed costs for the year were $60,000,how much were sales?
A)$150,000
B)$200,000
C)$600,000
D)can't be determined from the information given

Question

Quizplus · Accepted Answer

Contribution margin = Sales - Variable costs
Since Contribution margin is 40% of Sales, we can write: 
Contribution margin = 0.4 x Sales
Also, net income is 10% of Sales: 
Net Income = 0.1 x Sales

Using these formulas and the given fixed cost of $60,000, we can solve for Sales:

0.4 x Sales - Fixed Costs = 0.1 x Sales
0.3 x Sales = Fixed Costs
0.3 x Sales = $60,000
Sales = $60,000 / 0.3
Sales = $200,000

Therefore, the answer is B) $200,000.

For Its Most Recent Fiscal Year,a Firm Reported That Its