8pt In 2016 X Company had revenue of 175000 and incurred the

8pt In 2016, X Company had revenue of $175,000 and incurred the following costs Direct materials Direct labor [all variable Variable overhead Fixed overhead Variable selling and administration Fixed selling and administration $31,500 19,250 33,250 16,800 10,500 17,500 If revenue and cost relationships are not expected to change in 2017, what must revenue be in order for X Company to earn $90,000? 8. AO $88,636 BO $128,522 CC) $186,357 DO $270,217 BC) $391,815 FO $568,132

Solution

Revenue 175,000 less:Variable expense direct materials 31,500 Direct labor 19,250 Variable overhead 33,250 Variable selling & administ 10,500 total variable expense 94,500 Contribution 80,500 contribution margin = 80500/175000 46.00% total fixed expense fixed overhead 16,800 fixed selling and administration 17,500 total fixed expense 34,300 Revenue required = (fixed expense+target profit)/contribution margin (34300+90000)/46% 270217.4 answer option d) 270,217