The Formula That Can Be Used to Calculate Sales Dollars

question 17

Multiple Choice

The formula that can be used to calculate sales dollars necessary in order to earn a target income is

• A) (Fixed costs + Contribution margin)/(Contribution margin ratio).
• B) (Fixed costs + Target income)/(Contribution margin ratio).
• C) (Fixed costs + Variable costs)/(1 - Variable cost ratio).
• D) (Fixed costs + Target income )/(1 - Sales ratio).
• E) All of these are correct.

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Definitions:

Lot Size

The quantity of units produced or purchased in a single production run or order to capture economies of scale or meet demand.

Volume-Based Discount

A pricing strategy where the price per unit of goods decreases as the quantity purchased increases, designed to encourage larger orders.

Pricing Schedule

A pricing schedule lists the prices for goods or services, often varying based on quantities purchased, contract length, or buyer types, to accommodate different purchasing scenarios.

Quantity Ordered

The total number of units of a product or service that a customer commits to buying at a specific time.