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16 June, 11:27

During its most recent fiscal year, Raphael Enterprises sold 360,000 electric screwdrivers at a price of $19.80 each. Fixed costs amounted to $1,296,000 and pretax income was $1,656,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?

a. $7,128,000.

b. $2,952,000.

c. $5,472,000.

d. $4,176,000.

e. $2,880,000.

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Answers (1)
  1. 16 June, 15:09
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    Answer: Option (d) is correct.

    Explanation:

    Contribution margin = Fixed cost + Pretax Income

    = $1,296,000 + $1,656,000

    = $2,952,000

    Variable cost = Sales - Contribution margin

    = (360,000 units * $19.80 per unit) - $2,952,000

    = $7,128,000 - $2,952,000

    = $4,176,000
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