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Calculate the Net Revenue Requirement based on the following financial information: Minimum Profit Goal: $225,981 last 3-year

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Answer #1
Statement based on Last 3 year average data
Particulars Amount ($)
Average Revenue $ 6,068,839.49
Less: Average Direct costs $ (5,377,508.12)
Less: Average Variable overheads $    (300,161.51)
Contribution $     391,169.86
Calculation of Fixed cost
Cotribution (as calculated above) $      391,169.86
Less: Average Profit Margin $      203,820.91
Fixed Cost $     187,348.95
Contribution margin as % of Revenue
= (Contribution / Revenue) *100
= (391,169.86 / 6,068,839.49) *100
=6.45%
Minimum required Contribution Calculation
Particulars Amount ($)
Minimum Required Profit $      225,981.00
Add: Fixed Cost $      187,348.95
Minimum Required Contribution $     413,329.95
Required Net Revenue
=Required Contribution / Contribution as percentage of sales
= 413,329.95 / 6.45%
= 6,408,216.28
There fore Required Net Revenue = $ 6,408,216.28
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