Question

MC Qu. 91 Raven Company has a target of earning... Raven Company has a target of earning $70,100 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 $36,200

Answer 1

The amount of dollar sales must be achieved to reach the goal is $331,875.

Step-by-step explanation:

This can be calculated using the following formula:

Amount of dollar sales required = (Targeted pre-tax income + Fixed costs) / Contribution margin ratio ……..(1)

Where:

Amount of dollar sales required = ?

Targeted pre-tax income = $70,000

Fixed costs = $36,200

Contribution margin ratio = 32%, or 0.32

Substituting all the values into equation (1), we have:

Amount of dollar sales required = ($70,000 + $36,200) / 0.32 = $106,200 / 0.32 = $331,875

Thereforee, the amount of dollar sales must be achieved to reach the goal is $331,875.