Kreter, Inc. earned net income of $350,000 last year. This year it wants to earn net income of $400,000. The company's fixed costs are expected to be $500,000, and variable costs are expected to be 60% of sales.

Instructions

(a) Determine the required sales to meet the target net income of $400,000 using the mathematical equation.

(b) Using a CVP income statement format, prove your answer.