Which of the following equations calculates sales dollars to earn target income?
A) Sales Dollars to Earn Target Income = Fixed Costs / Contribution Margin Ratio
B) Sales Dollars to Earn Target Income = (Total Fixed Cost + Target Income) / (Contribution Margin Ratio)
C) Sales Dollars to Earn Target Income = Total Variable Costs / Contribution Margin per Unit
D) Sales Dollars to Earn Target Income = (Fixed Costs + Target Income ) / (1 − Sales Ratio)
E) Sales Dollars to Earn Target Income = Contribution Margin Ratio / Target Income

Question

Quizplus · Accepted Answer

The equation for sales dollars to earn target income takes into account the total fixed costs, the target income, and the contribution margin ratio. Choice B correctly incorporates all three variables in the equation.

Which of the Following Equations Calculates Sales Dollars to Earn