Question

A target income refers to:

a. Income at the minimum contribution margin.
b. Income from the most recent period.
c. Income only in a multiproduct environment.
e. Income planned for a future period.
f. Income at the break-even point.

Answer 1

e. Income planned for a future period

Step-by-step explanation:

A target income is an income planned for a future period to be used. The target income can be determined by cost-volume-profit analysis.

The target income can be calculated by;

• Multiplying the projected number of units to be sold by their projected contribution margin to arrive at the total contribution margin for the period.
• Then subtract the total amount of projected fixed cost for the period.