During its most recent fiscal year, Raphael Enterprises sold 200,000 electric screwdrivers at a price of $15 each. Fixed costs amounted to $400,000 and pretax income was $600,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?
A) $2,400,000.
B) $2,000,000.
C) $3,000,000.
D) $1,600,000.
E) $1,000,000.

Question

Quizplus · Accepted Answer

The total revenue is $3,000,000 (200,000 units x $15). Subtracting fixed costs ($400,000) and pretax income ($600,000) from total revenue gives variable costs of $2,000,000.

During Its Most Recent Fiscal Year, Raphael Enterprises Sold 200,000