Ng Company sells one product that has a sales price of $20 per unit,variable costs of $12 per unit,and total fixed costs of $300,000.What is the amount of sales volume in dollars necessary to attain a desired profit of $100,000?
A) $250,000
B) $750,000
C) $1,000,000
D) $666,667

Question

Quizplus · Accepted Answer

To find the sales volume in dollars necessary to attain a desired profit, use the formula: Sales = (Fixed Costs + Desired Profit) / Contribution Margin Ratio. The contribution margin per unit is $20 - $12 = $8. The contribution margin ratio is $8 / $20 = 0.4. Therefore, Sales = ($300,000 + $100,000) / 0.4 = $1,000,000.

Ng Company Sells One Product That Has a Sales Price