Question

need help solving. thank you

Question 6 2.5 pts At current sales revenue of $800, total variable costs are $640 and total fixed costs are $50. Your boss gave you a profit target of $150. How much do you need to sell in dollars to meet this target? O $840 O $1,000 not enough information -- need data on units O $250 O $200

Answer 1

At currentlevel, Profit is

Profit = Sales - Variable Cost - Fixed Cost = 800 - 640 - 50= $110.

Now, to reach $150 profit, 40 is to be earned in addition.

The Contribution Margin = Sales - Fixed Cost = 800 - 640 = 160.

So, Now, the additional contribution will go only to profit. So, the $800 additional salesgives $160 profit

Thus, $40 profit would require $200 sales. ( $\frac{800 * 40}{160}$ )

So, To earns $150 in Profit , Sales should be $1,000

correct answer is Option (B) $1,000