When sales dollars are used as the measure of volume in the cost-volume-profit equation,the focus is on solving for total revenue required to break even or a target profit rather than total units.Target Profit in Sales Dollars equals which of the following?
A)total contribution margin divided by total sales.
B)unit contribution margin divided by unit sales price.
C)total fixed costs divided by the contribution margin ratio.
D)(sum of total fixed costs plus target profit)divided by the contribution margin ratio.

Question

Quizplus · Accepted Answer

When using sales dollars as the measure of volume in the cost-volume-profit equation and solving for target profit, we need to determine the total revenue required to cover both fixed costs and a desired profit level. This can be calculated as (total fixed costs + target profit)/contribution margin ratio. Therefore, the correct choice is (D).

When Sales Dollars Are Used as the Measure of Volume