A company expects to get fixed expenses 15,000 next year, Sales Residential $60,000, Sales Commercial $140,000,Contribution margin ratio for Residential 50% ,Contribution margin ratio for Commercial 30%.

what would be the corporation total dollar sales have to be next year to get profit 100,000?

For residential customer: For commercial customer:

Sales=$60000 Sales=$140000

Contribution margin ratio=50% Contribution margin ratio=30%

Fixed expenses=$15000 Fixed expenses=$15000

The contribution margin for residential customer is: The contribution margin for commercial customer is:

Contribution margin= Sales*contribution margin ratio Contribution margin= Sales*contribution margin ratio

Contribution margin= $60000*0.5= $30000 Contribution margin= $140000*0.3=$42000

Here the ratio of contribution margin will be:

Residential : Commercial

$30000 : $42000

5 : 7

The target profit to be reached is $100000

Fixed expenses are $15000

Target profit+ fixed expenses= $115000

This $115000 should be divided in the ratio of contribution margin.

Step-by-step explanation

Residential : Commercial

$115000(5/12): $115000(7/12)

$47917 : $67083

Now contribution margin value has changed.We will calculate the sales value.

For residential customer:

Contribution margin= Sales* Contribution margin ratio

$47917 = Sales* 0.5

Sales = $47917/0.5= $95834

For commercial customer:

Contribution margin= Sales*Contribution margin ratio

$67083 = Sales*0.3

Sales = $223610

Dollar value to attain the target profit of $100000 is

= $95834+ $223610

= $319444