Question

1. Given the information below, use WACM to find the dollar sales needed to achieve the profit goal. Show your work and answer.

   1. Annual profit requirement: 10% return on investment for $500,000

   2. Fixed cost $150,000

Menu Items	Revenue %	Variable Cost %
A	50%	0.4
B	20%	0.4
C	30%	0.5

Answer 1

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WACM	Product A	Product B	Product C	Total	Note
Variable Cost %	40%	40%	50%		A
Contribution margin %	60%	60%	50%		B=1-A
Sales mix	50%	20%	30%		C
Weighted average Contribution margin per unit	0.30	0.12	0.15	0.57	D=B*C
Target net income ($ 500,000*10%)				50,000.00	E
Add: Total Fixed cost				150,000.00	F
Target contribution				200,000.00	G=E+F
Target sales $				350,877.19	H=G/D
Target sales $- Product wise	175,438.60	70,175.44	105,263.16		K=H*C