【A.09.02】How many sales (in dollars) are required to achieve a target profit?

Briefing Note
Reading comprehension is a skill that empowers lifelong learning intelligence for a better self.
To determine how many sales (in dollars) are required..

✅ ..to achieve a target profit, you need to consider the following factors:

✅ Fixed Costs

🚩 These are costs that don’t change with the level of production and sales. Examples include rent, salaries, and insurance.

✅ Variable Costs

🚩 These are costs that change with the level of production and sales. Examples include raw materials, labour, and shipping.

✅ Sales Revenue

🚩 This is the total amount of revenue generated from sales.

✅ Profit

🚩 This is the amount of money left over after all costs have been deducted from sales revenue.

To calculate the sales revenue needed to achieve a target profit..

✅ ..you can use the following formula:

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For illustration..

✅ ..let’s say your total fixed costs are $10,000, your variable costs are 40% of sales revenue, and your target profit is $5,000, you would calculate your required sales revenue as follows:

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