Lynn Company sells one product at a price of $25 per unit. Variable expenses are 20...
Lynn Company sells one product at a price of $25 per unit. Variable expenses are 20 % of sales, and fixed expenses are $25,000. The revenues required to achieve a target profit of $5,000 are:
Homework Answers
Contribution margin ratio = 100% - Variable cost ratio = 100% - 20% = 80%
Revenues required to achieve a target profit = (Fixed expenses + Target profit) / Contribution margin ratio
Revenues required to achieve a target profit = ($25,000 + $5,000) / 0.80
Revenues required to achieve a target profit = $37,500
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