Farmers' Industries has fixed costs of $400,000 and variable costs are 60% of sales.How much will Farmers report as sales when its net income equals $40,000?
A)$1,100,000
B)$733,333
C)$1,040,000
D)$264,000

Question

Quizplus · Accepted Answer

To find the sales when net income is $40,000, use the formula: Sales = (Fixed Costs + Net Income) / (1 - Variable Cost Percentage). Plugging in the values: Sales = ($400,000 + $40,000) / (1 - 0.60) = $440,000 / 0.40 = $1,100,000.

Farmers' Industries Has Fixed Costs of $400,000 and Variable Costs