Management anticipates fixed costs of $72,500 and variable costs equal to 40% of sales.What will pretax income equal if sales are $325,000?

A) $57,500.
B) $122,500.
C) $130,000.
D) $181,250.
E) $252,500.

Question

Management anticipates fixed costs of $72,500 and variable costs equal to 40% of sales.What will pretax income equal if sales are $325,000?A) $57,500.B) $122,500.C) $130,000.D) $181,250.E) $252,500.

Mellissa Ramirez · Accepted Answer

Final Answer : B, Explanation :  Pretax income is calculated by subtracting total costs (fixed + variable) from sales. Variable costs are 40% of $325,000, which equals $130,000. Fixed costs are $72,500. Total costs are $130,000 + $72,500 = $202,500. Sales are $325,000, so pretax income is $325,000 - $202,500 = $122,500.

Management anticipates fixed costs of $72,500 and variable costs equal to 40% of sales.What will pretax income equal if sales are $325,000?

A) $57,500.
B) $122,500.
C) $130,000.
D) $181,250.
E) $252,500.

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