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During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year?

Respuesta :

Answer:

$1,700,000

Explanation:

Contribution margin is the difference between the total sales and the total variable cost. Both sales and variable cost are functions of the number of units sold. As the number of units sold increases, so does sales and variable cost and vice versa.

The fixed cost is deducted from the contribution margin to get the pretax income.

Hence given

Sales = $3,200,000

Contribution margin = $1,500,000

Variable cost = $3,200,000 - $1,500,000

= $1,700,000

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