Target income sales

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:

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

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

See also

• Break-even
• Cost–volume–profit analysis