Homework Answers
Break-even sales = Fixed Cost / Contribution Margin
Therefore,
Contribution Margin = Fixed Cost / Break-even sales
= $250,000 / $1,600,000
= 0.15625 = 15.625%
Projected Profit = Contribution - Fixed Cost
= ($2,400,000 * 15.625%) - $250,000
= $375,000 - $250,000
= $125,000
Ans : The Projected Profit is
$125,000
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