Question

Following is the Becker Company Ltd. partial income statement for the most recent year:
	Becker Company Ltd.
	Partial Income Statement
	Most Recent Year
Sales		$1,190,000
Cost of goods sold		476,000
Gross margin			$714,000
Less operating expenses:
	Fixed	$39,000
	Variable	357,000	396,000
Operating income			$318,000

Assuming CoGS are all variable.

What would the Becker Company sales have to be in order for the company to have an operating income of $500,000?

Select one:

a. $2,001,988

b. $1,411,000

c. $1,372,000

d. $1,796,667

e. $1,567,824

Answer 1

Sales		1190000
Less: Variable expenses
Cost of goods sold	476000
Operating expenses	357000
Total Variable expenses		833000
Contribution margin		357000
Contribution margin ratio		30%	=357000/1190000
Fixed expenses	39000
Add: Operating income	500000
Required Contribution margin	539000
Divide by Contribution margin ratio	30%
Required sales	1796667
Option D $1,796,667 is correct