Smith Co. has a contribution margin ratio of 40% and a breakeven point of $200,000 in sales. If the firm reports net income of $50,000 after taxes of 50%, what were total sales for the year?

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Contribution Margin = 40% of SalesBreakeven Point = $200,000Net Income = $50,000Taxes = 50%Sales = (Breakeven Point + Net Income) / Contribution Margin Ratio= ($200,000 + $50,000) / 40%= $250,000 / 40%= $625,000Therefore, total sales for the year were $625,000.

Smith Co Has a Contribution Margin Ratio of 40% and a a Breakeven