Question

The contribution margin ratio of Kuck Corporation's only product is 75%. The company's monthly fixed expense is $456,000 and the company's monthly target profit is $42,000. Determine the dollar sales to attain the company's target profit.

Answer 1

$664,000

Step-by-step explanation:

Kuck corporation has a product whose contribution margin ratio is 75%

= 75/100

= 0.75

The company has a fixed expense of $456,000

The company has a target profit of $42,000

Based on the values above, the dollar sales to attain the company's target profit can be calculated as follows

Dollar sales to reach target profit = (Target profit + fixed expenses) /Contribution margin ratio

= ($456,000+$42,000)/75/100

= $498,000/0.75

= $664,000

Hence the dollar sales to reach the required company's target profit is $664,000