Maxfield Company has fixed costs of $200,000 and variable costs are 60% of sales. How much will Maxfield Company report as sales when its net income equals $20,000?
A) $550,000
B) $366,667
C) $520,000
D) $132,000

Question

Quizplus · Accepted Answer

To find the sales when net income is $20,000, use the formula: Sales = (Fixed Costs + Net Income) / (1 - Variable Cost Percentage). Here, Sales = ($200,000 + $20,000) / (1 - 0.60) = $220,000 / 0.40 = $550,000.

Maxfield Company Has Fixed Costs of $200,000 and Variable Costs