Asked by megha ramani on Jul 03, 2024
Verified
Johnston Co.anticipates total fixed costs of $120,000 and variable costs equal to 40% of sales.What is the pretax income if sales are $650,000?
Variable Costs
Expenses that vary directly with the level of production or sales volume, such as materials and labor.
Pretax Income
The income that a company earns before any taxes are deducted, representing the profitability of the company before government intervention.
- Ascertain the number of unit sales needed to attain the specified pre-tax profit.
Verified Answer
AM
ARATHY MOHANJul 03, 2024
Final Answer :
Pretax Income = $650,000 - (.40 ∗ $650,000)- $120,000 = $270,000
Learning Objectives
- Ascertain the number of unit sales needed to attain the specified pre-tax profit.