Question

g Bloom Company management predicts that it will incur fixed costs of $264,000 and earn pretax income of $374,400 in the next period. Its expected contribution margin ratio is 56%. Required:

Answer 1

$1,140,000 and $501,600

Step-by-step explanation:

The computation is shown below:

a. Amount of total dollar sales

= (Fixed cost + pre tax income) ÷ (Contribution margin ratio)

= ($264,000 + $374,400) ÷ (56%)

= $1,140,000

b. And, the total variable cost is

Sales $1,140,000

Less:

Fixed cost -$264,000

Pretax income -$374,400

Variable costs $501,600

We simply applied the above format and equation