ABC Company estimates the following data for the coming month Total variable cos
ID: 2596142 • Letter: A
Question
ABC Company estimates the following data for the coming month
Total variable costs
$40,000.00
Income tax rate
40%
Contribution margin percentage
50%
Estimated net income
$6,000.00
Find the estimated sales revenue for the coming month.
Between 0 and $20,000.00
Between $20,000.00 and $40,000.00
Between $40,001.00 and $60,000.00
Between $60,000 and 80,001.00
ABC Company estimates the following data for the coming month
Total variable costs
$40,000.00
Income tax rate
40%
Contribution margin percentage
50%
Estimated net income
$6,000.00
Find the estimated sales revenue for the coming month.
?Explanation / Answer
Contribution margin=Sales-Variable costs
Hence Variable costs=(1-0.5)=0.5Sales
Hence total sales=(40,000/0.5)=$80,000
Hence the correct option is D.