Watson company has monthly fixed costs of $83,000 and a 40% contribution margin ratio. if the company has set a target monthly income of $15,000, what dollar amount of sales must be made to produce the target income? $207,500 $170,000 $39,200 $245,000 $37,300

Question

Karlee Stout

Business

24 August, 02:55

Watson company has monthly fixed costs of $83,000 and a 40% contribution margin ratio. if the company has set a target monthly income of $15,000, what dollar amount of sales must be made to produce the target income? $207,500 $170,000 $39,200 $245,000 $37,300

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Answers (1)

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Robertson · Answer 1

The formula is:

Target sales = (Fixed Costs + Target monthly income) / Contribution margin ratio

Target sales = ($83,000 + $15,000) / 0.4 =

= $98,000 / 0.4 = $245,000

Answer:

D) $245,000 must be made to produce the target income.