Question

Management anticipates fixed costs of $72,700 and variable costs equal to 44% of sales. What will pretax income equal if sales are $327,000?

a) $143,880.
b) $254,300.
c) $110,420.
d) $71,180.
e) $189,090.

Answer 1

$110,420

Step-by-step explanation:

Given that;

Fixed cost = $72,700

Variable costs = $44%

Sales = $327,000

The formula for pretax income is

= Sales - variable costs - fixed costs

= $327,000 - $143,880 - $72,700

= $110,420

Pretax income is $110,420