During its most recent fiscal year, Raphael Enterprises sold 380,000 electric screwdrivers at a price of $20.40 each. Fixed costs amounted to $1,444,000 and pretax income was $1,824,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question? a. $4,484,000. b. $3,268,000. c. $5,928,000. d. $3,752,000. e. $3,040,000.

Question

Business

Ariella Compton

8 June, 22:48

During its most recent fiscal year, Raphael Enterprises sold 380,000 electric screwdrivers at a price of $20.40 each. Fixed costs amounted to $1,444,000 and pretax income was $1,824,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question? a. $4,484,000. b. $3,268,000. c. $5,928,000. d. $3,752,000. e. $3,040,000.

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Answers (1)

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Leonardo Castaneda · Answer 1

Option (a) is correct.

Explanation:

Pretax income = Contribution - Fixed cost

Contribution = Pretax income + Fixed cost

= $1,824,000 + $1,444,000

= $3,268,000

Sales - Variable Cost = Contribution

Variable Cost = Sales - Contribution

= (380,000 electric screwdrivers * $20.40 each) - $3,268,000

= $7,752,000 - $3,268,000

= $4,484,000