In 2017 X Company had revenue of 166400 and i d the followin

In 2017, X Company had revenue of $166,400 and i d the following costs: Direct materials Direct labor [all variable] Variable overhead Fixed overhead Variable selling and administration Fixed selling and administration $28,288 14,976 29,952 15,100 4,992 18,200 if revenue and cost relationships are not expected to change in 2018, what must revenue be in order for X Company to earn $90,000 Submit Answer Tries 0/3 0 Communication Blocked 9

Solution

CALCULATION OF THE RATIO OF THE EXPENSES IN PROPORTIONATE TO THE SALES Amount Profit Ratio Direct Materials $                         28,288 $       1,66,400 17.0% Direct Labour $                         14,976 $       1,66,400 9.0% Variable Overhead $                         29,952 $       1,66,400 18.0% Fixed Overhead $                         15,100 Fixed   Variable Selling and administration $                           4,992 $       1,66,400 3.0% Fixed Selling and administration $                         18,200 Fixed   CALCULATION OF THE EXPENSES FOR GETTING THE PROFIT OF $ 90,000 Profit & Fixed Cost Expenses % Amount required for Earn $ 90,000 Direct Materials $                         90,000 17.0% $                 15,300 Direct Labour $                         90,000 9.0% $                    8,100 Variable Overhead $                         90,000 18.0% $                 16,200 Fixed Overhead $                         15,100 Fixed   $                 15,100 Variable Selling and administration $                         90,000 3.0% $                    2,700 Fixed Selling and administration $                         18,200 Fixed   $                 18,200 Total Expenses = $                 75,600