Marie Manufacturing reported net income of $42,120 and has a 35% tax rate.Marie manufactures a product which sells for $20 per unit and whose variable costs are 62.5% of sales.If Marie sold 23,040 units, what were the company's operating income and fixed costs (round your answer if necessary)?

Question

Quizplus · Accepted Answer

Operating income is calculated as Sales - Variable Costs - Fixed Costs. Given the net income and tax rate, we can find the operating income before taxes by dividing the net income by (1 - tax rate), which gives us $64,800. To find fixed costs, we calculate Sales (23,040 units * $20/unit = $460,800) and Variable Costs (62.5% of $460,800 = $287,800), then subtract these from the operating income. This gives us fixed costs of $108,000.

Marie Manufacturing Reported Net Income of $42,120 and Has a 35