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    Calculating sales for the Honeyville Company

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    The contribution margin ratio is 30% for the Honeyville Company and the break-even point in sales is $150,000. If the company's target net operating income is $60,000, sales would have to be:

    a $200,000
    b $350,000
    c $250,000
    d $210,000

    However, last year, honeyville Company's break-even point in sales was $900,000, and its variable expenses were 75% of sales. If the company lost $32,000 last year, sales must have amounted to

    a $868,000
    b $804,000
    c $772,000
    d $628,000

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    Solution Preview

    Fixed cost =Sales * (contribution margin ratio)=150K * 30% = 45 K
    now that the income is 60,000
    Total contribution margin should be = income + ...

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