Home / Assignment Help / Montoya manufacturing has fixed costs of $3,000,000 and variable costs are 40% of sales. what are the required sales if montoya desires net income of $300,000?

Montoya manufacturing has fixed costs of $3,000,000 and variable costs are 40% of sales. what are the required sales if montoya desires net income of $300,000?

Answered by answersmine AT 22/10/2019 – 05:06 AM

Fixed costs = $3,000,000
Variable costs = 40% of Sales
Sales – x
Net income = $300,000
3,000,000 + 0.4 x + 300,000 = x
3,300,000 = x – 0.4 x
0.6 x = 3,300,000
x = 3,300,000 : 0.6
x = 5,500,000
We can prove it:
3,000,000 ( FC )+ 2,200,000 ( VC ) + 300,000 = 5,500,000
Answer:
The required sales for Montoya manufacturing: $ 5,500,000.

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