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Unformatted text preview: (c) What dollar amount of sales would be necessary to achieve a pretax income of $120,000? (a)Contribution Margin Ratio = (Selling Price - Variable Cost) / Selling Price Contribution Margin Ratio = ($80 - $32) / $80 Contribution Margin Ratio = $48 / $80 Contribution Margin Ratio = 60% (b) Break-even Point in Dollar Sales = Total Fixed Costs / Contribution Margin Ratio Break-even Point in Dollar Sales = $630,000 / 60% Break-even Point in Dollar Sales = $1,050,000 (c) Target Sales = (Total Fixed Costs + Target Income) / Contribution Margin Ratio Target Sales = ($630,000 + $120,000) / 60% Target Sales = $750,000 / 60% Target Sales = $1,250,000 a...
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This note was uploaded on 11/15/2010 for the course AC 202 taught by Professor Nancyeverett during the Spring '09 term at Park.
- Spring '09