A is corrent. The solutions approach is to use the standard breakeven formula and solve for sales (S). Variable costs are $150,000 at a sales level of $200,000; therefore, variable costs are .75S ($150,000/$200,000). S = VC + FC + Expected profit S = .75S + $60,000 + .10S .15S = $ 60,000 S = $400,000 Remember that the requirement was the increase in sales to achieve a profit of 10% of sales. The correct answer is $200,000 ($400,000 total sales needed less $200,000 present sales level).
B is incorrect. An additional $200,000 in sales is needed.
B is incorrect. An additional $200,000 in sales is needed.
D is incorrect. An additional $200,000 in sales is needed.
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