The contribution margin ratio is 25% for Grain Company and the break-even point in sales is $200,000.To obtain a target net operating income of $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
$200,000 = Fixed expenses F1F1F1S1F1F1F10 0.25
Fixed expenses = $200,000 F1F1F1S1F1F1F10 0.25 = $50,000
Dollar sales to attain a target profit = (Target profit + Fixed expenses)F1F1F1S1F1F1F10 CM ratio
= ($60,000 + $50,000)F1F1F1S1F1F1F10 0.25 = $440,000

The Contribution Margin Ratio Is 25% for Grain Company and the Break-Even