How Much Sales Are Required to Earn a Target Net

question 98

Multiple Choice

How much sales are required to earn a target net income of $128,000 if total fixed costs are $160,000 and the contribution margin ratio is 40%?

• A) $400,000
• B) $648,000
• C) $720,000
• D) $320,000

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Definitions:

Generally Accepted Accounting Principles

A set of accounting standards and practices that are widely used and accepted in the preparation of financial statements in the United States.

Budgeted Selling

The projected or planned selling expenses over a specific period, often used in financial planning.

Sales Revenue

The primary source of revenue in a merchandising company.

Selling Expenses

Costs incurred directly in the selling of goods or services, such as commissions and advertising.