Better Bonds provided the following data:
$$\begin{array} { l r }
\text { Sales } & \$ 540,000 \
\text { Variable costs } & \$ 378,000 \
\text { Fixed costs } & \$ 120,000 \
\text { Expected production and salesin units } & 40,000
\end{array}$$
-Refer to the Figure.How many sales in dollars are needed to generate a profit of $30,000?
A)$100,000
B)$150,000
C)$214,286
D)$500,000

Question

Better Bonds provided the following data:
 $$\begin{array} { l r } 
\text { Sales } & \$ 540,000 \
\text { Variable costs } & \$ 378,000 \
\text { Fixed costs } & \$ 120,000 \
\text { Expected production and salesin units } & 40,000
\end{array}$$
-Refer to the Figure.How many sales in dollars are needed to generate a profit of $30,000?
A)$100,000
B)$150,000
C)$214,286
D)$500,000

Quizplus · Accepted Answer

To find the sales needed to generate a profit of $30,000, calculate the contribution margin per unit, then use the formula: (Fixed Costs + Desired Profit) / Contribution Margin Ratio. Contribution Margin = Sales - Variable Costs = $540,000 - $378,000 = $162,000. Contribution Margin Ratio = $162,000 / $540,000 = 0.3. Required Sales = ($120,000 + $30,000) / 0.3 = $500,000.

Better Bonds Provided the Following Data -Refer to the Figure