Target income sales

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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 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