a company requires 2700000 in sales to meet its net income target. its contribution margin is 20$ and fixed costs are $300000. what is the company's target net income

To find the company's target net income, we can use the formula related to the contribution margin and fixed costs:

\[
\text{Target Net Income} = \text{Total Sales} - \text{Variable Costs} - \text{Fixed Costs}
\]

The contribution margin per unit is given as $20. The contribution margin represents the difference between sales and variable costs, so the total contribution margin for the given sales would be:

\[
\text{Total Contribution Margin} = \text{Total Sales} - \text{Variable Costs}
\]

However, it's easier to use the equation in terms of contribution margin:

\[
\text{Total Contribution Margin} = \text{Contribution Margin per unit} \times \text{Number of Units Sold}
\]

Given that the company needs to cover fixed costs and reach its net income target, the equation can be rearranged as:

\[
\text{Target Net Income} = \text{Total Contribution Margin} - \text{Fixed Costs}
\]

We know that total sales must be $2,700,000, and fixed costs are $300,000. The contribution margin is $20 per unit.

### Step 1: Calculate the number of units sold
To find the number of units sold:

\[
\text{Number of Units Sold} = \frac{\text{Total Sales}}{\text{Selling Price per Unit}}
\]

However, in this case, the total contribution margin will be:

\[
\text{Total Contribution Margin} = 2,700,000 - \text{Fixed Costs}
\]

### Step 2: Calculate Target Net Income
Thus, the target net income can be calculated as:

\[
\text{Target Net Income} = \text{Total Contribution Margin} - \text{Fixed Costs}
\]


So, Net profit should be solved as \[
\boxed(300000).



A company requires 2,700,000 in sales to meet its net income target. Its contribution margin is $20 and fixed costs are $300,000. What is the company's target net income?

Learn how to calculate the target net income for a company with $2,700,000 in sales, a $20 contribution margin, and $300,000 in fixed costs. This solution uses fundamental concepts of financial math, including contribution margin and fixed cost analysis. Suitable for students in Grades 10-12 or those studying financial business.

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