Question

During its most recent fiscal year, Raphael Enterprises sold 370,000 electric screwdrivers at a price of $20.10 each. Fixed costs amounted to $1,369,000 and pretax income was $1,739,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question

Answer 1

Answer:

$4,329,000

Explanation:

We know that

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

where,

Sales = Number of units sold × selling price per unit

        = 370,000 units × $20.10

        = $7,437,000

And, the other items values remain the same

Now put these values to the above formula

So, the value would be equal to

$1,739,000 = $7,437,000 - variable cost - $1,369,000

So, the variable cost = $4,329,000