Question

g Bloom Company management predicts that it will incur fixed costs of $264,000 and earn pretax income of $374,400 in the next period. Its expected contribution margin ratio is 56%. Required:

Answer 1

Answer:

$1,140,000 and $501,600

Explanation:

The computation is shown below:

a. Amount of total dollar sales

= (Fixed cost + pre tax income) ÷ (Contribution margin ratio)

= ($264,000 + $374,400) ÷ (56%)

= $1,140,000

b. And, the total variable cost is

Sales                         $1,140,000

Less:

Fixed cost                -$264,000

Pretax income          -$374,400

Variable costs          $501,600

We simply applied the above format and equation