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21 June, 19:43

During its most recent fiscal year, Raphael Enterprises sold 200,000 electric screwdrivers at a price of $15 each. Fixed costs amounted to $400,000 and pretax income was $600,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?

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  1. 21 June, 19:51
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    variable cost = $2,000,00

    Explanation:

    given data

    sold = 200,000

    price = $15 each

    Fixed costs = $400,000

    pretax income = $600,000

    solution

    we know that Pre-tax income that is express as

    Pre-tax income = Sales - variable cost - fixed cost ... 1

    and here sale is

    Sales = Number of units sold * selling price per unit ... 2

    put value in equation 2 we get sale

    Sales = 200,000 units * $15

    Sales = $3,000,000

    now put all value in equation 1 and we get variable cost that is

    $600,000 = $3,000,000 - variable cost - $400,000

    solve it we get

    variable cost = $2,000,00
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