For Wickham Co., sales is $20,000,000, fixed expenses are $600,000 and the contr

Question

For Wickham Co., sales is $20,000,000, fixed expenses are $600,000 and the contribution margin is 36%. What is the required sales in dollars to earn a net income of $400,000? For Wickham Co., sales is $20,000,000, fixed expenses are $600,000 and the contribution margin is 36%. What is the required sales in dollars to earn a net income of $400,000? For Wickham Co., sales is $20,000,000, fixed expenses are $600,000 and the contribution margin is 36%. What is the required sales in dollars to earn a net income of $400,000?

Explanation / Answer

Target  contribution margin=Fixed cost+Target profit

=(600,000+400,000)=$10,000,000

Hence required sales=(10,000,000/0.36)

=$2,777,777.78(Approx).

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