Answer:
- SALES IN DOLLAR $1,296,000
- VARIABLE COST IN DOLLAR $972,000
Explanation:
The process would be to use formulas of the variable costing method to solve for each term:
We are going to use the operating income formula
<em>contribution margin - fixed cost = operating income</em>
<u>Replace </u>with the know values:
<em>contribution margin</em> - 160,000 = 164,000
now <u>solve </u>for the unknow value
contribution = 164,000 + 160,000 = 324,000
Next step we use the contribution margin ratio formula to get the sales:
<em>contribution margin/sales = contribution ratio</em>
<u>Replace </u>with the know values:
324,000/<em>sales </em>= 0.25
now <u>solve </u>for the unknow value:
sales = 324,000/0.25 = 1,296,000
Lastly we use the contribution margin formula to solve for variable cost:
sales - variable cost = contribution margin
<u>Replace </u>with the know values:
1,296,000 -<em> variable cost </em>= 324,000
now <u>solve </u>for the unknow value:
variable cost= 1,296,000 - 324,000 = 972,000
