Revenue Required = Total Cost of Incident / ________.

• A. Profit Margin
• B. Total Sales
• C. Operational Costs
• D. Total Profits

Answer: (A)

Profit margin is the fraction of revenue that remains as profit after covering costs. When planning how much revenue is needed to not only cover the total cost but also achieve a desired level of profitability, you scale the cost by the portion of revenue that will be profit. In this setup, dividing the total cost by the profit margin yields the revenue required to attain that margin. The idea is that revenue must be enough so that the profit portion (the margin) matches the target level, given the costs.