Sales 800,000; Variable costs 480,000; Fixed costs 280,000. What sales revenue is required for a profit of 200,000?

Home › MCQs › SSC Financial and Cost Accounting P-1 › Question #6125

SSC Financial and Cost Accounting P-1 QUESTION #6125

Question 1

Sales $800,000; Variable costs $480,000; Fixed costs $280,000. What sales revenue is required for a profit of $200,000?

Correct Answer Explanation

Option C ($1,000,000) is correct.

CS ratio = ($800,000 − $480,000) ÷ $800,000 = 40%

Required sales = (Fixed costs + Target profit) ÷ CS ratio = ($280,000 + $200,000) ÷ 0.40 = $1,000,000