Question

The break-even point in dollar sales for Rice Company is $480,000 and the company’s contribution margin ratio
is 40 percent. If Rice Company desires a profit of $84,000, how much would sales have to total?
Answer:
Fixed cost $288,000
Variables cost $192,000 (0.4)= $76,800 each marginal $ sale $0.40 variables
MS=(84,000/0.6)=$140,000
Break even sale + marginal sale
$480,000 + 140,000 = $620,000
Fixed cost + variable cost = total cost
$288,000+$76,800=$364,800
Profit =480,000-364,800
Profit= $115,200

my answer came back wrong, can you please help me.. thanks

Answer 1

480,000 x 60% = $288,000 variable cost
480,000 - 288,000 = $192,000 fixed costs


192,000 + 84,000 + 0.60x = x
276,000 = 0.40x
x = $690,000 sales

Check
690,000 Sales
- 192,000 Fixed Costs
- 414,000(0.60 x 690,000) variable costs
= $84,000 profit