Question

g The contribution margin ratio of Donath Corporation's only product is 64%. The company's monthly fixed expense is $454,200 and the company's monthly target profit is $40,200. Required: Determine the dollar sales to attain the company's target profit.

Answer 1

Answer:

Break-even point (dollars)= $772,500

Explanation:

Giving the following information:

The contribution margin ratio of Donath Corporation's only product is 64%. The company's monthly fixed expense is $454,200 and the company's monthly target profit is $40,200.

To calculate the sales in dollars to obtain the desired profit, we need to use the following formula:

Break-even point (dollars)= (fixed costs + desired profit)/ contribution margin ratio

Break-even point (dollars)= (454,200 + 40,200) / 0.64

Break-even point (dollars)= $772,500