The amount of revenue required to earn a targeted profit is equal to a. total fixed cost divided by contribution margin. b. total fixed cost divided by the contribution margin ratio. c. targeted profit divided by the contribution margin ratio. d. total fixed cost plus targeted profit divided by contribution margin ratio. e. targeted profit divided by the variable cost ratio.

d.total fixed cost plus targeted profit divided by contribution margin ratio.

Explanation:

At the break-even point, a business does not make any profits or incur losses.  Using the cost-volume-profit analysis concept CVP, break-even is calculated by dividing fixed cost by the contribution margin per unit.  The contribution margin per unit is the price minus variable costs.

Sales made after the break-even point will add to the operating income of the business. At the break-even, both fixed and variable costs have been met. Operating income is calculated by subtracting the break-even level in dollars from the sales revenue. Therefore, operating income can be computed by adding the target sales to the break-even, then dividing by contribution margin per unit.

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