Question

Erza company manufactures various size swords. Erza did an analysis and has a contribution margin ratio of 509 . This month, profit was $23,000, and fixed costs were $24,500. How much was Erza's sales revenue? a. $95,000 b. $23,750 c. $58.361 d. $47.500

Answer 1

Erza's sales revenue was $95,000.

Step-by-step explanation:

The contribution margin ratio is calculated by dividing the contribution margin (sales revenue minus variable costs) by the sales revenue. In this case, the contribution margin ratio is 509. Let's assume the sales revenue is 'x'.

Contribution margin ratio = Contribution margin / Sales revenue

509 = (Sales revenue - Variable costs) / Sales revenue

Using the formula, we can rearrange it to find sales revenue:

Sales revenue - Variable costs = 509 * Sales revenue

Sales revenue - 509 * Sales revenue = Variable costs

Sales revenue * (1 - 509) = Variable costs

Sales revenue = Variable costs / (1 - 509)

Using the given information, the fixed costs are $24,500 and the profit is $23,000. We can calculate the variable costs:

Variable costs = Profit + Fixed costs

Variable costs = $23,000 + $24,500 = $47,500

Now we can calculate the sales revenue:

Sales revenue = $47,500 / (1 - 509) = $95,000