The total volume in sales dollars that would be required to attain a given target operating profit is determined by dividing the sum of the fixed expenses and the target operating profit by the contribution margin ratio.

Question

Quizplus · Accepted Answer

This statement is true. The formula to calculate the total sales necessary to attain a target operating profit is:

Total sales = (Fixed expenses + Target operating profit) / Contribution margin ratio.

The Total Volume in Sales Dollars That Would Be Required