Management anticipates fixed costs of $72,500 and variable costs equal to 40% of sales. What will pretax income equal if sales are $325,000? a. $57,500
b. $122,500
c. $130,000
d. $181,250
e. $252,500

Pretax income= $122,500

Explanation:

Giving the following information:

Fixed costs= $72,500

Variable costs equal to 40% of sales.

Sales= $325,000

To calculate the pretax income, we need to use the following formula:

Pretax income= contribution margin - fixed costs

Pretax income= 325,000*(1-0.4) - 72,500

Pretax income= $122,500

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