Asked by Jasmine Gardiner on Jun 23, 2024
Verified
Target income refers to:
A) Income at the break-even point.
B) Income from the most recent period.
C) Income planned for a future period.
D) Income only in a multiproduct environment.
E) Income at the minimum contribution margin.
Target Income
The desired profit level that a company aims to achieve within a specific period, often used in budgeting and financial planning.
Contribution Margin
The amount of revenue remaining after subtracting variable costs, used to cover fixed costs and generate profit.
- Engage in target income analysis to estimate the sales required, in either quantity or dollar terms, to meet an intended profit objective.
Verified Answer
JD
Jeremy DavignonJun 23, 2024
Final Answer :
C
Explanation :
Target income refers to the amount of income that a company plans to achieve in a future period. It is typically used in budgeting and planning processes as a goal for the company to work towards. It is not the same as income at the break-even point (A) or income from the most recent period (B). It can be calculated in a multiproduct environment, but this is not a requirement (D). It is also not the same as income at the minimum contribution margin (E).
Learning Objectives
- Engage in target income analysis to estimate the sales required, in either quantity or dollar terms, to meet an intended profit objective.
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