@Teal I Google'd this because I couldn't figure it out either, and came up with a thread on here a few years ago for this question. It looks like this is the Wiley explanation:
The solutions approach is to use the standard breakeven formula and solve for sales (S). Variable costs are $150,000 at a sales level of $200,000; therefore, variable costs are .75S ($150,000/$200,000). S = VC + FC + Expected profit S = .75S + $60,000 + .10S .15S = $ 60,000 S = $400,000 Remember that the requirement was the increase in sales to achieve a profit of 10% of sales. The correct answer is $200,000 ($400,000 total sales needed less $200,000 present sales level).
And here was an explanation from another participant, which I found easier to understand:
First step is to figure out the VC as a percentage of its sale which is 75% (150/200).
Then you can use the following equation to figure the rest out. Equation is simply Sales minus the VC minus the FC equals the desires ending result.
S – .75S – 60,000 = .1S
.25S – .1S = 60,000
S = 60,000/.15
S = 400,000
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