Asked by Chelsea Lewis on Jun 17, 2024
Verified
A company has a goal of earning $128,000 in pre-tax income.The contribution margin ratio is 30%.What dollar amount of sales must be achieved to reach the goal if fixed costs are $64,000?
Contribution Margin Ratio
The percentage of each sales dollar that contributes to covering fixed costs and generating profit.
Pre-tax Income
The total earnings of a company before any taxes have been deducted, often considered when assessing the profitability of a company.
- Identify the unit sales volume required to meet the targeted pre-tax revenue.
Verified Answer
YE
Yasemin EroltuJun 20, 2024
Final Answer :
Targeted dollar sales = ($64,000 + $128,000)/0.30 = $640,000
Learning Objectives
- Identify the unit sales volume required to meet the targeted pre-tax revenue.