Question

For Oriole Company, sales is $3000000, fixed expenses are $900000, and the contribution margin ratio is 36%. What is required sales in dollars to earn a target net income of $800000?

Answer 1

Sales required= $4,722,222.22

Step-by-step explanation:

Giving the following information:

Fixed expenses are $900,000

Contribution margin ratio is 36%

Desired profit= $800,000

To calculate the sales required, we need to use the following formula:

Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio

Break-even point (dollars)= (900,000 + 800,000) / 0.36

Break-even point (dollars)= $4,722,222.22