Homework Answers
Solution:
Contribution margin ratio = 100% - Variable cost ratio = 100% - 35% = 65%
Required sales to meet target income = (Fixed costs + target income) / CM ratio = ($29,770 + $156,000) / 65% = $285,800
| Sales Revenue | $285,800.00 |
| Variable costs | $100,030.00 |
| Contribution margin | $185,770.00 |
| Fixed costs | $29,770.00 |
| Net operating income | $156,000.00 |
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