Casey Company has fixed costs of $1,500,000 and variable costs are 40% of sales. What are the required sales if Casey Company desires net income of $150,000?
A) $2,750,000
B) $2,500,000
C) $4,125,000
D) $3,750,000

Question

Quizplus · Accepted Answer

Net income = Sales - (Fixed costs + Variable costs)$150,000 = Sales - ($1,500,000 + 0.40 * Sales)$150,000 = Sales - $1,500,000 - 0.40 * Sales$150,000 + 0.40 * Sales = Sales - $1,500,0000.60 * Sales = $1,500,000 + $150,000Sales = ($1,500,000 + $150,000) / 0.60Sales = $2,750,000

Casey Company Has Fixed Costs of $1,500,000 and Variable Costs