Respuesta :
Answer:
$810,000
Explanation:
The computation is shown below:
The increase in fixed cost is
= Salary of each sales representative × number of sales representatives hired
= $45,000 × 18
= $810,000
Now the increase in sales needed for break even is
= Increase in fixed cost ÷ Contribution margin ratio
= $810,000 ÷ 30%
= $2,700,000
As we know that break even sales is computed by dividing the fixed cost by the contribution margin ratio and we applied the same
The Increase in sales required to break even is $2,700,000.
Here, we are to calculate what increase in sales will it needed to break even on the increase in fixed costs to hire the new sales reps.
- The formula for increase in fixed cost is {Salary of each sales representative × number of sales representatives hired}
Increase in fixed cost = $45,000 * 18
Increase in fixed cost = $810,000
The formula to derive the increase in sales required to break even is {Increase in fixed cost / Contribution margin ratio}
Given Information
Contribution margin ratio = 30%
Increase in sales required to break even = $810,000 / 30%
Increase in sales required to break even = $2,700,000
Therefore, the Increase in sales required to break even is $2,700,000.
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