The contribution margin ratio of Baginski Corporation's only product is 53%. The company's monthly fixed expense is $617,980 and the company's monthly target profit is $23,000. The dollar sales to attain that target profit is closest to:
A)$1,166,000
B)$1,209,396
C)$339,719
D)$327,529

Question

Quizplus · Accepted Answer

We can use the formula to find out the dollar sales required to achieve the target profit:

Dollar sales = (Fixed expenses + Target profit) / Contribution margin ratio

Substituting the given values, we get:

Dollar sales = ($617,980 + $23,000) / 0.53
Dollar sales = $640,980 / 0.53
Dollar sales = $1,209,396.23

Therefore, the closest answer is B) $1,209,396.

The Contribution Margin Ratio of Baginski Corporation's Only Product Is