Palmer's Custom Saddlery reported sales of $700,000 for the current year, fixed costs of $130,000 and a contribution margin ratio of 30%.Profit before taxes equals:

Name: Palmer's Custom Saddlery reported sales of $700,000 for the current year, fixed costs of $130,000 and a contribution margin ratio of 30%.Profit before taxes equals:
Brand: Quizplus
Rating: 4.9 (48 reviews)

Question

Quizplus · Accepted Answer

Profit before taxes is calculated as (Sales x Contribution Margin Ratio) - Fixed Costs. Here, it is ($700,000 x 0.30) - $130,000 = $210,000 - $130,000 = $80,000.

Palmer's Custom Saddlery Reported Sales of $700,000 for the Current