Steiner Manufacturer's contribution margin is $200, after-tax income is $96, and the tax rate is 40%. What are the fixed costs?

Name: Steiner Manufacturer's contribution margin is $200, after-tax income is $96, and the tax rate is 40%. What are the fixed costs?
Brand: Quizplus
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Question

Quizplus · Accepted Answer

We can use the formula: Net income = Contribution margin - Fixed costs - Taxes.
$96 = $200 - Fixed costs - 0.4($200-Fixed costs) 
Simplifying and solving for Fixed costs, we get Fixed costs = $40. Therefore, the answer is choice C.

Steiner Manufacturer's Contribution Margin Is $200, After-Tax Income Is $96