Farmers' Industries has fixed costs of $600000 and variable costs are 60% of sales. How much will Farmers report as sales when its net income equals $60000?
A) $1650000
B) $1100000
C) $1560000
D) $396000

Question

Quizplus · Accepted Answer

To find the sales when net income equals $60,000, we use the formula: Sales = (Fixed Costs + Desired Net Income) / (1 - Variable Cost Percentage). Plugging in the values: Sales = ($600,000 + $60,000) / (1 - 0.60) = $660,000 / 0.40 = $1,650,000.

Farmers' Industries Has Fixed Costs of $600000 and Variable Costs