Drenning Manufacturing produces flooring material. The monthly fixed costs are $10,000 per month. The unit sales price is $75, and variable cost per unit is $35. Drenning wishes to earn an operating income of $25,000. Using the contribution margin ratio, calculate the total sales revenue that is needed. (Round intermediate calculations to five decimal places.)
What will be an ideal response?
Required sales in dollars = (Fixed costs + Target profit) / Contribution margin ratio
Unit contribution margin = Net sales revenue per unit - Variable costs per unit
Contribution margin ratio = Contribution margin / Net sales revenue
Unit contribution margin = $75 - $35 = $40
Unit contribution ratio = $40 / $75 = .53333
Required sales in dollars = ($10,000 + $25,000) / .53333 = $65,625
You might also like to view...
Which assertions may be tested for the "transactions and events" category of management assertions?
A. Existence, rights and obligations, accuracy, authorization, and completeness. B. Occurrence, completeness, rights and obligations, accuracy, cutoff, and classification. C. Existence, completeness, rights and obligations, accuracy, cutoff, classification, and presentation. D. Occurrence, completeness, authorization, accuracy, cutoff, classification, and presentation.
An act passed in response to the wave of corporate accounting scandals is the
A. Sorbine-Oxide Act. B. Saxon-Ordanly Act. C. Sardonic-Oxone Act. D. Sarbanes-Oxley Act.
The positioning process:
A) must be continually modified to match customer wants and needs B) is a fixed value-added process conducted by the salesperson C) involves isolation from the competition D) is performed by the customer in the buying cycle E) should be performed every five years
Which of the following is a recognized classification of torts?
A) misdemeanor B) felony C) strict liability D) contributory liability