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Determine the required sales to meet the target net income

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Reference no: EM133123813

Question - Alicia's Infinity is an art boutique that specializes in wedding invitations and stationeries. Alicia's Infinity earned net income of $44,815 during 2020. The company wants to earn net income of $120,000 more during 2021. The company's fixed costs are expected to be $128,300, and variable costs are expected to be 30% of sales.

Required -

(a) Determine the required sales to meet the target net income during 2021.

(b) Compute break-even sales using the contribution margin ratio.

(c) Compute margin of safety ratio assuming actual sales in 2020 were $235,450.

Reference no: EM133123813

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