A company has fixed costs of $270,000, a unit contribution margin of $14, and a contribution margin ratio of 55%. If the firm wants to earn a target $60,000 pretax income, what amount of sales must the company make (rounded to the nearest whole dollar)?
A) 490,909.
B) 381,818.
C) 330,000.
D) 600,000.
E) 109,090.

Question

Quizplus · Accepted Answer

To find the required sales, use the formula: Required Sales = (Fixed Costs + Target Income) / Contribution Margin Ratio. Plugging in the values: (270,000 + 60,000) / 0.55 = 600,000.

A Company Has Fixed Costs of $270,000, a Unit Contribution