43. In 2014, Stone Balloon had the following information:
Variable Costs $50,000
Fixed Costs $20,000
Net Income $10,000
What is the annual sales volume required for them to have a before-tax income of 30,000? |
Total Sales revenue = Total cost + Net Income | ||||||
(50000+20000) + 10000 = 80,000 | ||||||
Total contribution = Fixed cost t+ Net income | ||||||
20000+10000 = 30000 | ||||||
CM ratio = Contribution / sales revenue | ||||||
30,000 /80,000 *100 = 37.50% | ||||||
Fixed cost | 20000 | |||||
Add: Target before tax income | 30000 | |||||
Total Target contribution | 50000 | |||||
Divide: CM ratio | 37.50% | |||||
Annual Target sales in $ | 133333.3 | |||||
Answer is $ 133,333 | ||||||
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