Daytona Manufacturer 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. Daytona 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 = 53.33%
Required sales in dollars = ($10,000 + $25,000 ) / 53.33% = $65,629
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