Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 3 - Cost-Volume-Profit Analysis - Assignment Material - Problems - Page 98: 3-33(2)

Answer

To calculate the revenue needed to earn a target operating income of \$102,000, use the formula: Required Revenue = (Fixed Costs + Target Operating Income) $\div$ (1 - (Variable Cost per Tour $\div$ Selling Price per Tour)) Required Revenue = (\$570,000 + \$102,000) $\div$ (1 - (\$6,300 $\div$ \$7,500)) Required Revenue ≈ \$972,000

Work Step by Step

To calculate the revenue needed to earn a target operating income of \$102,000, use the formula: Required Revenue = (Fixed Costs + Target Operating Income) $\div$(1 - (Variable Cost per Tour $\div$ Selling Price per Tour)) Required Revenue = (\$570,000 + \$102,000) $\div $(1 - (\$6,300 $\div$ \$7,500)) Required Revenue ≈ \$972,000
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