Asked by
Jamie Giron
on Dec 01, 2024
Verified
A company has fixed costs of $270,000,a unit contribution margin of $14,and a contribution margin ratio of 55%.If the company wants to earn a target $60,000 pretax income,what amount of sales must it make (rounded to the nearest whole dollar) ?
A) 490,909.
B) 330,000.
C) 109,090.
D) 381,818.
E) 600,000.
Pretax Income
The income of a company before tax is deducted.
Contribution Margin Ratio
A financial metric that measures how a product's selling price covers variable costs, expressed as a percentage of sales revenue.
Unit Contribution Margin
Unit contribution margin is the difference between the selling price of a product and its variable costs, indicating how much each unit sold contributes to covering fixed expenses and generating profit.
- Calculate the position at which expenditure and incoming funds are equalized, looking at both the quantity of goods and the amount of money made.
- Gain insight into how sales, fixed expenditures, variable expenditures, and their effects contribute to pre-tax earnings.
Verified Answer
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Learning Objectives
- Calculate the position at which expenditure and incoming funds are equalized, looking at both the quantity of goods and the amount of money made.
- Gain insight into how sales, fixed expenditures, variable expenditures, and their effects contribute to pre-tax earnings.