The managerial accountant reported the following Fixed costs

The managerial accountant reported the following:

Fixed costs: $3,000

Target operating income: $1,500

Contribution margin percentage: 25%

What will be the revenues needed to earn target operating income of $1,500?

Contribution = Fixed costs + Target operating income = $3000 + $1500 = $4500

Contribution margin % = Contribution / Sales = 25%

Sales = Contribution / 25% = $4500 / 25% = $18000

Revenues needed to earn target operating income of $1500 is $18000.