Montoya manufacturing has fixed costs of $3,000,000 and variable costs are 40% of sales. what are the required sales if montoya desires net income of $300,000?

Fixed costs = $3,000,000

Variable costs = 40% of Sales

Sales - x

Net income = $300,000

3,000,000 + 0.4 x + 300,000 = x

3,300,000 = x - 0.4 x

0.6 x = 3,300,000

x = 3,300,000 : 0.6

x = 5,500,000

We can prove it:

3,000,000 (FC) + 2,200,000 (VC) + 300,000 = 5,500,000

Answer:

The required sales for Montoya manufacturing: $ 5,500,000.