Raven Company has a target of earning $71,400 pre-tax income. The contribution margin ratio is 32%. What amount of dollar sales must be achieved to reach the goal if fixed costs are $38,800?

a. $289,375.

b. $410,000.

c. $222,813.

d. $343,438.

e. $38,600.

The amount of dollar sales to be achieved to reach the goal is $343,438

Explanation:

We have the following details:

Fixed Cost = $ 38,600

Earning Required = $71,300

Hence Contribution Required = Fixed Cost+Earning Required

= ($38,600+$71,300)

= $ 109,900

We use then the following formula:

Contribution Margin ratio = Contribution Margin/Sales

32% = $ 109,900/Sales

= $ 109,900/32%

= $343,438. Amount of dollar sales to be achieved to reach the goal