International Imports is a merchandising firm.Last year, the company reported sales of $674,500 and cost of goods sold of $404,700.The company's total variable selling and administrative expense was $60,705, and fixed selling and administrative expense was $53,960.The total fixed costs for the firm are
A)$458,660.
B)$404,700.
C)$60,705.
D)$53,960.

Question

Quizplus · Accepted Answer

To calculate the total fixed costs for the firm, we need to use the following formula:
Total Costs = Fixed Costs + Variable Costs
We have the following information:
Sales = $674,500
Cost of goods sold = $404,700
Variable selling and administrative expense = $60,705
Fixed selling and administrative expense = $53,960
Using the formula above, we can calculate the total variable costs:
Total variable costs = Cost of goods sold + Variable selling and administrative expense = $404,700 + $60,705 = $465,405
Now we can use the formula again to calculate the total fixed costs:
Total costs = Fixed costs + Total variable costs
$674,500 = Fixed costs + $465,405
Fixed costs = $674,500 - $465,405 = $209,095
Therefore, the total fixed costs for the firm are $53,960 (option D).

International Imports Is a Merchandising Firm