If Dorian Company Desires a Monthly Net Income Equal to 10

question 143

Multiple Choice

If Dorian Company desires a monthly net income equal to 10% of sales,monthly sales will have to be:

• A) $45,600.
• B) $90,000.
• C) $96,000.
• D) $120,000.

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales activities, such as rent, salaries, and insurance premiums.

Variable Costs

Costs that change in proportion to the level of production or business activity.

Unit Contribution Margin

The amount each unit sold contributes to fixed costs and profit after variable costs are subtracted.

Operating Income

The revenue accrued from a firm's foundational business activities, prior to the removal of interest and tax charges.