Question

Marigold Corp. has fixed costs of $2200000 and variable costs are 20% of sales. What are the required sales if Marigold desires net income of $200000

Answer 1

Answer:

$10,000

Explanation:

The required sales is calculated as;

= Fixed costs + Desired profit / Contribution margin ratio

Given that;

Fixed costs = $2,200,000

Desired profit = $200,000

Variable cost = 20% of sales

Sales = X

Contribution margin ratio =

X = $2,200,000 + $200,000 /