What formula calculates the sales dollars needed to earn a desired profit?
A) (fixed costs + contribution margin)/(1 - variable cost ratio)
B) (fixed costs + desired profit)/(1 - variable cost ratio)
C) (fixed costs + variable costs)/(1 - variable cost ratio)
D) (fixed costs + desired profit)/(1 - sales ratio)

Question

Quizplus · Accepted Answer

The formula that calculates the sales dollars needed to earn a desired profit is (fixed costs + desired profit)/(1 - variable cost ratio). Choice B matches this formula, making it the correct answer. Choices A, C, and D are all variations of the formula for calculating the breakeven point.

What Formula Calculates the Sales Dollars Needed to Earn a Desired