Please show solution. Q 19.26: Pecan Industries has determined that its break-ev

Question

Please show solution.

Q 19.26: Pecan Industries has determined that its break-even point is $2,106,000. For the current year, variable costs are $2,254,000 in total and have consistently been 75% of sales. What are Pecan's fixed costs and net income for the current year? (Round to the nearest whole dollar where necessary) A Fixed costs of $2.106.000 and current year net income of $751.333 B Fixed costs of $1,579,500 and current year net income of $0 Fixed costs of $526,500 and current year net income of $0 D Fixed costs of $526,500 and current year net income of $224,833

Explanation / Answer

Contribution margin=sales-variable costs

=100-75

=25%of sales

=0.25*2106000

=$526500

At breakeven, contribution margin=fixed costs

Hence fixed costs =$526500

Total sales =(2254000/0.75)=$3005333.33

Hence contribution margin=(3005333.33*0.25)

=751333.33

Less:fixed costs =526500

Hence net income=224833

Hence the correct option is D.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---