Question

Watson Company has monthly fixed costs... Watson Company has monthly fixed costs of $74,000 and a 50% contribution margin ratio. If the company has set a target monthly income of $14,100, what dollar amount of sales must be made to produce the target income?

a. $176,200
b. $88,100
c. $148,000
d. $28,200
e. $119,800

Answer 1

a. $176,200

Step-by-step explanation:

The computation of the dollar amount of sales must be made to produce the target income is shown below:

= (Fixed cost + target monthly income) ÷ contribution margin ratio

= ($74,000 + $14,100) ÷ 50

= $176,200

Hence, the dollar amount of sales must be made to produce the target income is $176,200

Therefore the option a is correct