Required sales in dollars to meet a target net income is computed by dividing
A) fixed costs plus target net income by unit contribution margin.
B) variable costs plus target net income by unit contribution margin.
C) fixed costs plus target net income by contribution margin ratio.
D) total costs plus target net income by contribution margin ratio.

Question

Quizplus · Accepted Answer

The required sales in dollars to meet a target net income is calculated using the equation: Fixed costs + Target net income / Contribution margin ratio. This formula takes into account both the fixed costs and variable costs and determines the sales required to cover them and reach a target net income.

Required Sales in Dollars to Meet a Target Net Income