The contribution margin ratio is 30% for the Honeyville Company and the break-even point in sales is $150,000.If the company's target net operating income is $60,000,sales would have to be:

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Quizplus · Accepted Answer

Dollar sales to break even = Fixed expenses F1F1F1S1F1F1F10 CM ratio
$150,000 = Fixed expenses F1F1F1S1F1F1F10 0.30
Fixed expenses = $150,000 F1F1F1S1F1F1F10 0.30 = $45,000
Dollar sales to attain a target profit = (Target profit + Fixed expenses)F1F1F1S1F1F1F10 CM ratio
= ($60,000 + $45,000)F1F1F1S1F1F1F10 0.30 = $350,000

The Contribution Margin Ratio Is 30% for the Honeyville Company