Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / Day Company is a medium-sized manufacturer of lamps

Day Company is a medium-sized manufacturer of lamps

Management

Day Company is a medium-sized manufacturer of lamps. During the year, a new line called "Twilight" was made available to Day's customers. The breakeven point for sales of Twilight is $400,000, with a contribution margin of 40%. Assuming that the operating profit for the Twilight line for the year amounted to $200,000, total sales for the year amounted to

a. $600,000 b. $840,000 c. $900,000 d. $950,000

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Computation of Required Sales:

Required Sales = (Fixed Cost+Operating Profit)/Contribution Margin Ratio

Here,

Fixed Cost = Break-even Sales*Contribution Margin Ratio = $400,000*40% = $160,000

Required Sales = ($160,000+$200,000)/40% = $900,000

So, the correct option is C "$900,000".