During a recent fiscal year, Dawson Company reported pretax income of $125,000, a contribution margin ratio of 25% and total contribution margin of $400,000. Total variable costs must have been:

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The contribution margin ratio is calculated as Contribution Margin / Sales. Given the contribution margin ratio of 25% and total contribution margin of $400,000, the total sales can be calculated as $400,000 / 0.25 = $1,600,000. Total variable costs are then calculated as Total Sales - Total Contribution Margin = $1,600,000 - $400,000 = $1,200,000.

During a Recent Fiscal Year, Dawson Company Reported Pretax Income