a company has fixed costs of $270,000, a contribution margin per unit of $14, and a contribution margin…

a company has fixed costs of $270,000, a contribution margin per unit of $14, and a contribution margin ratio of 55%. if the company wants to earn a target income of $60,000, what amount of sales must it make? multiple choice 490,909 330,000 109,090 381,818 600,000

a company has fixed costs of $270,000, a contribution margin per unit of $14, and a contribution margin ratio of 55%. if the company wants to earn a target income of $60,000, what amount of sales must it make? multiple choice 490,909 330,000 109,090 381,818 600,000

Answer

Explanation:

Step1: Recall the formula for required sales

The formula for required sales to achieve a target income is (\text{Required Sales}=\frac{\text{Fixed Costs}+\text{Target Income}}{\text{Contribution Margin Ratio}})

Step2: Substitute the given values into the formula

Given fixed costs ((FC)) = (270000), target income ((TI)) = (60000), and contribution margin ratio ((CMR)) = (0.55)

[ \begin{align*} \text{Required Sales}&=\frac{270000 + 60000}{0.55}\ &=\frac{330000}{0.55} \end{align*} ]

Step3: Calculate the value

(\frac{330000}{0.55}=600000)

Answer:

(600000)