Question

During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?A. $1,900,000.B. $2,800,000.C. $1,300,000.D. $1,100,000.E. $1,700,000.

Answer 1

The correct answer is E

Step-by-step explanation:

The variable costs which is to be reported in the contribution margin income statement for the year of the company is computed as:

Formula of contribution margin is as:

Contribution margin = Total sales - Variable costs

where

Contribution margin is $1,500,000

Total sales is $3,200,000

Putting the vales above:

$1,500,000 = $3,200,000 - Variable costs

Variable Costs = $3,200,000 - $1,500,000

Variable costs = $1,700,000

Note: There is no use of pre-tax income