The Allen Company had the following income statement for the month of July 2011:
-What is the sales volume required to earn a profit of $9,000?

Question

The Allen Company had the following income statement for the month of July 2011:  
-What is the sales volume required to earn a profit of $9,000?

Quizplus · Accepted Answer

To calculate the sales volume required to earn a profit of $9,000, we need to use the contribution margin ratio. 
Contribution margin ratio = (Total revenue - Total variable costs) / Total revenue 
Contribution margin ratio = ($62,000 - $40,000) / $62,000 = 0.645
Now, we can use the contribution margin ratio to find out the sales volume required for a profit of $9,000: 
0.645X = $9,000 
X = $9,000 / 0.645 
X = 13,953.49 
So, the sales volume required to earn a profit of $9,000 is approximately 7,300 units. 
Therefore, the answer is C.

The Allen Company Had the Following Income Statement for the Month