Final answer:
The total variable costs, we first compute the total revenue by multiplying the sale price by the number of units sold, which equals $2,400,000. Next, we subtract the net income from the total revenue to get the total costs, which is $2,050,000. Finally, we subtract the total fixed costs from the total costs to find the total variable costs, which total $1,450,000 (option C).
Step-by-step explanation:
The question asks us to calculate the total variable costs during a reporting period for a company. To find this, we need to understand the components of profit in a business scenario. The formula to calculate profit (net income) is: Total Revenue (TR) - Total Costs (TC) = Net Income.
Total costs include both fixed costs and variable costs. Based on the provided information, we know the following:
- Sales = 300,000 units
- Sale price = $8 per unit
- Total fixed costs = $600,000
- Net income = $350,000
Firstly, we calculate the total revenue:
Total Revenue (TR) = Sale price * Number of units sold
TR = $8 * 300,000
TR = $2,400,000
Then, we use the formula for net income to find the total costs:
Net Income = Total Revenue (TR) - Total Costs (TC)
TC = TR - Net Income
TC = $2,400,000 - $350,000
TC = $2,050,000
As total costs include both fixed and variable costs, we can calculate the total variable costs:
Total Variable Costs (TVC) = Total Costs (TC) - Total Fixed Costs (TFC)
TVC = $2,050,000 - $600,000
TVC = $1,450,000
Thus, the amount of total variable costs during the reporting period is $1,450,000.