Target income sales

Target income sales can be computed as the point where Contribution equals Fixed Costs plus Target Income.

In cost accounting, target income sales are the sales necessary to achieve a given target income (or targeted income). It can be measured either in units or in currency (sales proceeds) and can be computed using contribution margin similarly to the break-even point:

$\begin{array}{cccc}& \text{Target Income Sales (in Units)}& & =\frac{\text{Fixed Costs}+\text{Target Income}}{\text{Unit Contribution}}\\ & \text{Target Income Sales (in Sales proceeds)}& & =\frac{\text{Fixed Costs}+\text{Target Income}}{\text{Contribution Margin Ratio}}\end{array}$

See also

• Break-even
• Cost–volume–profit analysis