What formula is used to calculate the sales dollars needed to earn a desired profit?
A)(fixed costs + contribution margin)/(1 − variable cost ratio)
B)(fixed costs + desired profit)/(1 − variable cost ratio)
C)(fixed costs + variable costs)/(1 − variable cost ratio)
D)(fixed costs + desired profit)/(1 − sales ratio)

Question

Quizplus · Accepted Answer

The formula used to calculate the sales dollars needed to earn a desired profit is (fixed costs + desired profit)/(1 − variable cost ratio). This formula takes into account the fixed costs, desired profit, and variable cost ratio to determine the amount of sales needed to earn the desired profit.

What Formula Is Used to Calculate the Sales Dollars Needed