Question

A firm expects to sell 25,900 units of its product at $7 per unit. Pretax income is predicted to be $60,900. If the variable costs per unit are $3, total fixed costs must be:_____.

Answer 1

Fixed costs= $42,700

Step-by-step explanation:

Giving the following information:

A firm expects to sell 25,900 units of its product at $7 per unit.

Pretax income is predicted to be $60,900.

Unitary variable cost= $3

The pretax formula is:

Pretax income= total sales - total variable cost - total fixed costs

We have to isolate the fixed cost:

Fixed costs= total sales - total variable cost - pretax income

Fixed costs= 25,900*(7-3) - 60,900

Fixed costs= $42,700