Answer:
total fixed cost= 90,000
Explanation:
Giving the following information:
A firm expects to sell 25,000 units of its product at $11 per unit. Pretax income is predicted to be $60,000. The variable costs per unit are $5.
The pretax income is calculated using the following formula:
Pretax income= total contribution margin - total fixed cost
60,000= 25,000*(11 - 5) - total fixed cost
60,000 - 150,000= - total fixed cost
total fixed cost= 90,000
Answer: $110,000
Explanation:
Given the following ;
Projected unit sale = 25,000
Cost per unit = $11
Projected Pretax income = $60,000
Variable cost per unit = $5
Total fixed cost =?
Pretax income is the earning accrued by a business after deduction all expenses except tax fees.
Pretax income can be calculated using the relation;
Pretax income = (Total contribution margin - fixed cost)
Total contribution margin = (Total cost per unit - Total variable cost)
Cost per unit total = 25000 × $11 = $275,000
Total variable cost = 25000 × $5 = $125,000
Total contribution margin = $275,000 - $125,000 = $170,000
Pretax income = total contribution margin - fixed cost
$60,000 = $(170,000 - total fixed cost)
Total fixed cost = $170,000 - $60,000 = $110,000
