[bancgirl99]

I have this accounting problem to solve:

Variable costs are 60% of sales, fixed costs are $195,000. Net income goal is $75,000. Compute required sales in dollars to meet the net income goal.

The formula I found is:

required sales = variable costs + fixed costs + target net income

so I wrote it as:

X = X * 60% + $195,000 + $75,000
X = X * 60% + $270,000
??

And now I am stumped. I cannot find anything in the textbook about this formula without knowing the variable cost figure. Can someone show me how to make the formula work? Is this even the right formula?

I am the mathless wonder.

[ArcSine]

You're not such a mathless wonder as you might think... you're on the right track, and a couple more steps will bring it home.

From where you are, deduct 0.6X from both sides to leave you with

0.4X = 270,000

Now divide both sides by 0.4 to give you

X = 270,000 / 0.4 = 675,000

Then to put a bow on the package, just confirm that revenue of 675K will indeed hit the target net of 75K.

[morgaine300]

Please don't double post your questions. This is a perfect example of why this actually just takes up more time on our part. Two of us have answered this -- time taken up that could have been utilized moving on to someone else. Every time someone does this -- it just takes longer to get to everyone else.