If the contribution margin ratio is 0.40,targeted net profit is $87 600,and targeted sales volume in dollars is $480 000,then total fixed costs are:

Question

Quizplus · Accepted Answer

Contribution Margin Ratio = (Sales - Variable Costs) / Sales
0.40 = (Sales - Variable Costs) / Sales
0.40 Sales = Sales - Variable Costs
0.60 Sales = Variable Costs
Targeted Net Profit = (Sales * Contribution Margin Ratio) - Fixed Costs
87600 = (0.40 * 480000) - Fixed Costs
87600 = 192000 - Fixed Costs
Fixed Costs = 104400. Therefore, the correct answer is C.

If the Contribution Margin Ratio Is 0