Question

If variable costs per unit are 70% of sales, fixed costs are $290,000 and target net income is $70,000, required sales are $1,200,000.

a. True
b. False

Answer 1

True.
To solve and make sure your answer is accurate:
Take the required sales of $1,200,000 and multiply it by .70(70%)
Variable costs per unit are $840,000 of sales.
Next, subtract the variable costs per unit of $840,000 from the required sales of $1,200,000.
This leaves you with $360,000 then, we will subtract the fixed costs of $290,000.
Which leaves the target net income of $70,000.