For its most recent fiscal year, a firm reported that its contribution margin was equal to 40 percent of sales and that its net income amounted to 10 percent of sales. If its fixed costs for the year were $60,000, how much were sales?
a. $150,000
b. $200,000
c. $600,000
d. can't be determined from the information given
B
Let S = Sales
Let CM = .40S
Let NI = .10S
FC = .30S
$60,000 = .30S
S = $200,000
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