Watson Company has monthly fixed costs of $83,000 and a 40% contribution margin ratio.If the company has set a target monthly income of $15,000,what dollar amount of sales must be made to produce the target income?
A)$245,000
B)$207,500
C)$37,300
D)$170,000
E)$39,200

Question

Quizplus · Accepted Answer

To find the required sales, use the formula: Sales = (Fixed Costs + Target Income) / Contribution Margin Ratio. Here, Sales = ($83,000 + $15,000) / 0.40 = $245,000.

Watson Company Has Monthly Fixed Costs of $83,000 and a 40