Question

during its most recent fiscal year, raphael enterprises sold 270,000 electric screwdrivers at a price of $17.10 each. fixed costs amounted to $729,000 and income was $999,000. what amount should have been reported as variable costs in the companys contribution margin income statement for the year in question?
multiple choice
$4,617,000
$2,889,000
$3,618,000
$2,160,000
$1,728,000

Explanation:

Step1: Calculate total revenue

Revenue = Price per unit × Number of units sold.
Revenue = \( 8.70\times270000=\$2349000 \)

Step2: Use the profit formula

Profit (Income) = Revenue - Variable costs - Fixed costs.
We need to find Variable costs. Rearranging the formula: Variable costs = Revenue - Fixed costs - Income.
Variable costs = \( 2349000 - 729000-999000 \)
Variable costs = \( 2349000-(729000 + 999000)\)
Variable costs = \( 2349000 - 1728000=\$621000 \)

Wait, no, actually, using the contribution - margin income statement formula: Contribution margin=Revenue - Variable costs, and Income = Contribution margin - Fixed costs. So Contribution margin=Income + Fixed costs.
Contribution margin=\(999000 + 729000=\$1728000\)

Answer:

\(\$1728000\)