Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Watson Company has monthly fixed costs of $91,000.
Contribution margin ratio= 0.40
To calculate the dollar amount of sales, we need to use the following formula:
Break-even point (dollars)= (fixed costs + desired profit)/ contribution margin ratio
Break-even point (dollars)= 91,000/0.4= 227,500
A) Desired profit= 15,800
Break-even point (dollars)= (91,000 + 15,800) / 0.40= 267,000
B) Desired profit= 267,000
Break-even point (dollars)= (91,000 + 267,000) / 0.40= 895,000
C) Desired profit= 106,800
Break-even point (dollars)= (91,000 + 106,800) / 0.40= 494,500
D) Desired profit= 227,500
Break-even point (dollars)= (91,000 + 227,500) / 0.40= 796,250
