(CGA)Del Co. has fixed costs of $100,000 and breakeven sales of $800,000. What is its projected profit at $1,200,000 in sales?

Name: (CGA)Del Co. has fixed costs of $100,000 and breakeven sales of $800,000. What is its projected profit at $1,200,000 in sales?
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Question

Quizplus · Accepted Answer

At breakeven sales of $800,000, Del Co. covers all fixed costs. With $1,200,000 in sales, the additional $400,000 contributes to profit. The contribution margin ratio is $100,000/$800,000 = 12.5%. Thus, $400,000 * 12.5% = $50,000 profit.