Aero Inc. requires sales of $2000000 to cover its fixed costs of $600000 and to earn net income of $500000. What percent are variable costs of sales?
A) 25%
B) 45%
C) 30%
D) 55%

Question

Quizplus · Accepted Answer

Variable costs as a percentage of sales can be calculated using the formula: Variable Costs = Sales - Fixed Costs - Net Income. In this case, Variable Costs = $2,000,000 - $600,000 - $500,000 = $900,000. Therefore, the percentage is $900,000 / $2,000,000 = 45%.

Aero Inc Requires Sales of $2000000 to Cover Its Fixed Costs