The contribution margin ratio is 25% for Grain Company and the break even point in sales...
The contribution margin ratio is 25% for Grain Company and the break even point in sales dollars is $200,000. If Grain Company's target net income is $60,000, sales would have to be equal to:
Question 4 options:
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Homework Answers
Break even sales in dollars = Fixed expense / Contribution Margin Ratio
$200000 = Fixed Expenses / 25%
Fixed Expenses = $200000 * 25% = $50000
Contribution - Fixed Expenses = Net Income
Let Sales be x
Contribution = 25% * x
25%x - $50000 = $60000
25%x = $110000
x = $110000 / 25% = $440000
To have a target income of $60000, the sales would have to be $440000. Option B is correct.
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