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At current sales revenue of $2,400, total variable costs are $960 and total fixed costs are $900. Your boss gave you a profit target of $1,800. How much do you need to sell in dollars to meet this profit target

Respuesta :

Zviko

Answer:

$4,500

Explanation:

Sales to reach target profit = (Fixed Cost + Target Profit) ÷ Contribution Margin Ratio

where,

Contribution Margin Ratio = Contribution ÷ Sales

                                           = ($2,400 - $960) ÷ $2,400

                                           = 0.60

therefore,

Sales to reach target profit = ($900 + $1,800) ÷ 0.60

                                             = $4,500

Conclusion

You need $4,500 to meet this profit target

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