The amount of sales needed to attain a desired profit is calculated by dividing __________ by the…
Desired profit plus fixed cost is the numerator used to calculate the required sales revenue. Contribution from sales must cover fixed cost and then provide the desired…
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The amount of sales needed to attain a desired profit is calculated by dividing __________ by the contribution margin ratio.
Answer and explanation
Correct answer C
Desired profit plus fixed cost is the numerator used to calculate the required sales revenue. Contribution from sales must cover fixed cost and then provide the desired profit, so required sales = (fixed cost + desired profit) ÷ contribution margin ratio.
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Maharashtra and Goa SET (MH SET)