Target Profit - Sales in Dollars Formula The following formula answers what amount of sales in dollars do we need to achieve our desired profit? Sales Dollars need for desired profit - Fixed Expenses + Dosirod Profit CM Ratio Try it: Sales are $500,000. Variable costs are $350,000. (Variable costs are 70% of sales.) Fixed Cost is $72,000. Desired Profit is $60,000. Answer-make sure you show all your work Practice Problem #1 We have multiple products and the CM Ratio for the business is 25%. The fixed selling costs are $90,000 per year, and the fixed administrative costs are $50,000 per year. a. How much sales (in dollars) do we need to break-even? Answer - make sure you show all your work. b. How much sales (in dollars) do we need to make a profit of $100,000? Answer - make sure you show all your work 1 c. We decide to put our products on sale. This will lower our CM Ratio to 20%. Now how much sales (in dollars) do we need to make a profit of $100,000? Answer - make sure you show all your work