Question

Sniffles, Inc. produces facial tissues. The company's contribution margin ratio is 77%. Fixed expenses are $240,400. To achieve a target profit of $930,000, Sniffles' sales rounded to the nearest dollar must be ______.

A.$1,242,408
B.$1,520,000
C.$5,088,695
D.$1,170,400"

Answer 1

To achieve a target profit of $930,000, Sniffles' sales rounded to the nearest dollar must be $1,170,400.

Step-by-step explanation:

To find the sales needed to achieve a target profit, we can use the formula:

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

Plugging in the given values, we have:

Sales = ($240,400 + $930,000) / 0.77 = $1,450,650.98

Rounding to the nearest dollar, Sniffles' sales must be approximately $1,450,651, so the correct answer is D. $1,170,400.