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Santa company. produces a single product whose variable costs are 50% of unit sales price, and...

Santa company. produces a single product whose variable costs are 50% of unit sales price, and its fixed costs are $50,000. What amount of revenue is required to generate a profit of $50,000?

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Answer #1
Step-1:Calculation of contribution margin ratio
Contribution margin ratio = 1-Variable cost ratio
= 1-0.50
= 50%
Step-2:Calculation of required sales revenue
Fixed Costs $           50,000
Target Profit $           50,000
Target Contribution margin $       1,00,000
/ Contribution margin ratio 50%
Target Sales revenue $       2,00,000
Thus,
Required amount of revenue is $       2,00,000
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