Koby Co.has sales of $200,000 with variable expenses of $150,000,fixed expenses of $60,000,and a net loss of $10,000.How much would Koby have to sell in order to achieve an operating income of 10% of sales?
A) $375,000.
B) $451,000.
C) $431,000.
D) $400,000.

Question

Quizplus · Accepted Answer

To achieve an operating income of 10% of sales, Koby Co. needs to cover both variable and fixed expenses and then have 10% of sales as profit. Let X be the sales needed. The equation is: X - 0.75X - 60,000 = 0.10X. Solving gives X = $400,000.

Koby CoHas Sales of $200,000 with Variable Expenses of $150,000,fixed Expenses