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18 November, 16:38

Afirm expects to sell 25,000 units of its product at $11 per unit. Pretax income is predicted to be $60,000. If the variable costs per unit are $5, total fixed costs must be: A. $65,000. B. $900,000. C. $125,000. D. $215,000. E. $275,000.

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  1. 18 November, 16:39
    0
    Answer: $110,000

    Explanation:

    Given the following;

    Projected unit sale = 25,000

    Cost per unit = $11

    Projected Pretax income = $60,000

    Variable cost per unit = $5

    Total fixed cost = ?

    Pretax income is the earning accrued by a business after deduction all expenses except tax fees.

    Pretax income can be calculated using the relation;

    Pretax income = (Total contribution margin - fixed cost)

    Total contribution margin = (Total cost per unit - Total variable cost)

    Cost per unit total = 25000 * $11 = $275,000

    Total variable cost = 25000 * $5 = $125,000

    Total contribution margin = $275,000 - $125,000 = $170,000

    Pretax income = total contribution margin - fixed cost

    $60,000 = $ (170,000 - total fixed cost)

    Total fixed cost = $170,000 - $60,000 = $110,000
  2. 18 November, 16:50
    0
    total fixed cost = 90,000

    Explanation:

    Giving the following information:

    A firm expects to sell 25,000 units of its product at $11 per unit. Pretax income is predicted to be $60,000. The variable costs per unit are $5.

    The pretax income is calculated using the following formula:

    Pretax income = total contribution margin - total fixed cost

    60,000 = 25,000 * (11 - 5) - total fixed cost

    60,000 - 150,000 = - total fixed cost

    total fixed cost = 90,000
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