Question

Sniffles, inc produces facial tissues. The company's contribution margin ratio is 77%. Fixed expenses are 240400. To achieve a target of 930000. Sniffles sales rounded to the nearest dollar must be__________________

Answer 1

To achieve a target profit of $930,000 with a contribution margin ratio of 77% and fixed expenses of $240,400, Sniffles, Inc. must achieve sales of $1,519,482 when rounded to the nearest dollar.

Step-by-step explanation:

The student's question pertains to determining the sales required for Sniffles, Inc. to achieve a target profit. To calculate the required sales, we use the formula:

Sales = (Target Profit + Fixed Expenses) / Contribution Margin Ratio

Given:

• Contribution Margin Ratio = 77%
• Fixed Expenses = $240,400
• Target Profit = $930,000

Substituting the values we get,

Sales = ($930,000 + $240,400) / 0.77

Sales = $1,170,400 / 0.77

Sales = $1,519,481.82

Therefore, rounded to the nearest dollar, Sniffles, Inc. must achieve sales of $1,519,482 to meet their target profit.