TRUE or FALSE

1- Relevant costs are expected future costs that differ among alternatives. TRUE
2- The fixed cost per unit of a product should stay the same throughout the relevant range of production.
FALSE
3- If a company increases fixed costs, then the breakeven point will be lower. FALSE
4- Sunk costs are past costs that are unavoidable. TRUE
5- Full costs of a product include variable costs, but not fixed costs. FALSE
6-The variable cost per unit of a product should stay the same throughout the relevant range of
production. TRUE
7- Merchandising companies hold only one type of inventory: direct material. FALSE
8- Operating income is sales revenue minus operating expenses. FALSE
9- Period costs are never included as part of inventory. TRUE
10- The degree of operating leverage at a specific level of sales helps the managers calculate the effect
that potential changes in sales will have on operating income. TRUE
11- Managerial accounting is highly regulated by rules and regulations. FALSE
12- A variable cost remains constant on a per-unit basis as production increases. TRUE
13- Absorption costing is more useful than variable costing in determining a company’s break-even point.
FALSE
14- Dividing total fixed costs by the contribution margin ratio yields break-even point in units. FALSE
15- Degree of Operating Leverage in Dollars = Contribution Margin / Profit before Taxes. TRUE
16- Financial accounting is most concerned with meeting the needs of internal users. FALSE
17- A cost object is anything for which management wants to collect or accumulate costs. TRUE
18- A cost that shifts upward or downward when activity changes by a certain interval is referred to as a
mixed cost. FALSE
19- A company’s break-even point is the level where total revenues equal total costs. TRUE
20- Unit sale to attain target profit= (Total Fixed Costs + target profit) / Contribution Margin per unit .TRUE
21- If a company increases fixed costs, then the breakeven point will be lower. FALSE
22- The cost of a machine purchased last year will be irrelevant in a decision for next year. TRUE
23- A linear cost function can only represent fixed cost behavior. FALSE
24- All manufacturing costs are inventoriable costs. TRUE
25- Period costs are never included as part of inventory. TRUE
26- Conversion costs include all direct manufacturing costs. FALSE
27- Depreciation on a factory can be classified as a period cost. FALSE
28- Managerial accounting is highly regulated by GAAP. FALSE
29- Dividing total fixed costs by the contribution margin ratio yields break-even point in dollars. TRUE
30- Degree of Operating Leverage in Dollars = Contribution Margin / Profit after Taxes. FALSE

Multiple choices
1- Direct materials are $20, direct labor is $5, variable overhead costs are $15, and fixed overhead costs
are $10. In the short term, the incremental cost of one unit is:
A) $15 B) $25 C) $40 D) $50

2- Which of the following would not need to be allocated to a cost object?

a. direct material. b. direct labor. c. direct production costs. d. all of the above.
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3- Answer the questions (1-3) using the information below:
K Manufacturing is approached by a European customer to fulfill a one-time-only special order for a
product similar to one offered to domestic customers. K Manufacturing has excess capacity. The following
per unit data apply for sales to regular customers:
Variable costs:
Direct materials $80
Direct labor 40
Manufacturing support 70
Marketing costs 30
Fixed costs:
Manufacturing support 90
Marketing costs 30
Total costs 340
Markup (50%) 170
Targeted selling price $510
1. What is the full cost of the product per unit?
A) $220 B) $340 C) $510 D) $170
Explanation: B) $80 + $40 + $70 + $30 + $90 + $30 = $340
2. What is the contribution margin per unit?
A) $170 B) $220 C) $290 D) $510
Explanation: C) $510 - ($80 + $40 + $70 + $30) = $290
3. For K Manufacturing, what is the minimum acceptable price of this special order?
A) $220 B) $290 C) $340 D) $510
Explanation: A) $80 + $40 + $70 + $30 = $220

4- Answer the questions (1-2) using the information below:

The East Company manufactures several different products. Unit costs associated with Product ORD203
are as follows:
Direct materials $50
Direct manufacturing labor 8
Variable manufacturing overhead 10
Fixed manufacturing overhead 23
Sales commissions (2% of sales) 5
Administrative salaries 9
Total $105
1. What are the variable costs per unit associated with Product ORD203?
A) $60 B) $82 C) $73 D) $105

2. What are the fixed costs per unit associated with Product ORD203?
A) $23 B) $32 C) $35 D) $44

5- Wheel and Tire Manufacturing currently produces 1,000 tires per month. The following per unit data
apply for sales to regular customers:
Direct materials $20
Direct manufacturing labor 3
Variable manufacturing overhead 6
Fixed manufacturing overhead 10
Total manufacturing costs $39
The plant has capacity for 3,000 tires and is considering expanding production to 2,000 tires. What is the
total cost of producing 2,000 tires?
A) $39,000 B) $78,000 C) $68,000 D) $62,000

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6- A linear cost function can represent:
A) mixed cost behaviors B) fixed cost behaviors
C) variable cost behaviors D) All of these answers are correct.

7-Answer the questions (1:4) using the information below:

For last year, AMR Manufacturing reported the following:
Revenue $420,000
Beginning inventory of direct materials, January 1 22,000
Purchases of direct materials 146,000
Ending inventory of direct materials, December 31 16,000
Direct manufacturing labor 18,000
Indirect manufacturing costs 40,000
Beginning inventory of finished goods, January 1 35,000
Cost of goods manufactured 104,000
Ending inventory of finished goods, December 31 36,000
Operating costs 140,000
1- What was AMR's cost of goods sold?
A) $103,000 B) $152,000 C) $268,000 D) $317,000
2-What was AMR's gross margin (or gross profit)?
A) $103,000 B) $152,000 C) $268,000 D) $317,000
3-What was AMR's operating income?
A) $76,000 B) $128,000 C) $177,000 D) $280,000
4-How much of the above would be considered period costs for AMR Manufacturing?
A) $104,000 B) $140,000 C) $246,000 D) $390,000

8- A cost that varies in total but remains constant on a per-unit basis with changes in activity is called a(n):
a. expired cost. b. fixed cost. c. variable cost. d. mixed cost.

9- CVP analysis requires costs to be categorized as

a. either fixed or variable. b. direct or indirect. c. product or period. d. standard or actual.

10- After the level of volume exceeds the break-even point

a. the contribution margin ratio increases.
b. the total contribution margin exceeds the total fixed costs.
c. total fixed costs per unit will remain constant.
d. the total contribution margin will turn from negative to positive.

11- The contribution margin ratio always increases when the

a. variable costs as a percentage of net sales increase.
b. variable costs as a percentage of net sales decrease.
c. break-even point increases.
d. break-even point decreases.

12- Answer the questions (1:4) using the information below:

The following information has been taken from the cost records of AMR Company for the past year:
Raw material used in production $326
Total manufacturing costs charged to production during the year 686
(includes direct material, direct labor, and overhead equal to 60% of
direct labor cost)
Cost of goods available for sale 826
Selling and Administrative expenses 25

Inventories Beginning Ending

Raw Material $75 $ 85
Work in Process 80 30
Finished Goods 90 110

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1- Refer to AMR Company. The cost of raw material purchased during the year was
a. $316. b. $336. c. $360. d. $411.
2- Refer to AMR Company. Direct labor cost charged to production during the year was
a. $135. b. $216. c. $225. d. $360.
3- Refer to AMR Company. Cost of Goods Manufactured was
a. $636. b. $716. c. $736. d. $766.
4- Refer to AMR Company. Cost of Goods Sold was
a. $691. b. $716. c. $736. d. $801.

13- If selling price per unit is $30, variable costs per unit are $20, total fixed costs are $10,000, the tax rate is 30%,
and the company sells 5,000 units, net income is:
a. $12,000 b. $14,000 c. $28,000 d. $40,000

14- N Company sells several products. Information of average revenue and costs is as follows:
Selling price per unit $20.00
Variable costs per unit:
Direct material $4.00
Direct manufacturing labor $1.60
Manufacturing overhead $0.40
Selling costs $2.00
Annual fixed costs $96,000
The contribution margin per unit is:
a. $6 b. $8 c. $12 d. $14

15- A cost that remains constant in total but varies on a per-unit basis with changes in activity is called a(n):
a. expired cost. b. fixed cost. c. variable cost. d. mixed cost.

16- Product costs are deducted from revenue

a. as expenditures are made. b. when production is completed.
c. as goods are sold. d. to minimize taxable income.

17- The three primary inventory accounts in a manufacturing company are

a. Merchandise Inventory, Supplies Inventory, and Finished Goods Inventory.
b. Merchandise Inventory, Work in Process Inventory, and Finished Goods Inventory.
c. Supplies Inventory, Work in Process Inventory, and Finished Goods Inventory.
d. Raw Material Inventory, Work in Process Inventory, and Finished Goods Inventory.

18- Cost of Goods Sold is an

a. unexpired product cost. b. expired product cost.
c. unexpired period cost. d. expired period cost.

19- Which of the following would need to be allocated to a cost object?

a. direct material b. direct labor
c. direct production costs d. indirect production costs

20- Answer the questions (1:3) using the information below:

Beginning finished goods, 1/1/2023 $ 90,000
Ending finished goods, 12/31/2023 77,000
Cost of goods sold 270,000
Sales revenue 500,000
Operating expenses 155,000
1- What is cost of goods manufactured for 2023?
A) $230,000 B) $257,000 C) $283,000 D) $355,000
2- What is gross margin for 2023?
A) $283,000 B) $355,000 C) $230,000 D) $257,000
3-What is operating income for 2023?
A) $75,000 B) $112,000 C) $62,000 D) $230,000

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21- Answer the questions (9:12) using the information below:
For last year, AMR Manufacturing reported the following:
Revenue $420,000
Beginning inventory of direct materials, January 1 22,000
Purchases of direct materials 146,000
Ending inventory of direct materials, December 31 16,000
Direct manufacturing labor 18,000
Indirect manufacturing costs 40,000
Beginning inventory of finished goods, January 1 35,000
Cost of goods manufactured 104,000
Ending inventory of finished goods, December 31 36,000
Operating costs 140,000
1- What was AMR's cost of goods sold?
A) $103,000 B) $152,000 C) $268,000 D) $317,000
2- What was AMR's gross margin (or gross profit)?
A) $103,000 B) $152,000 C) $268,000 D) $317,000
3- What was AMR's operating income?
A) $76,000 B) $128,000 C) $177,000 D) $280,000
4- How much of the above would be considered period costs for AMR Manufacturing?
A) $104,000 B) $140,000 C) $246,000 D) $390,000

22- Suppose that management believes that a 20% reduction in the selling price will result in a 20%
increase in sales. If this proposed reduction in selling price is implemented:
A) operating income will decrease by $9,000
B) operating income will increase by $9,000
C) operating income will decrease by $20,000
D) operating income will increase by $15,000

23- Answer the questions (1:2) using the information below:

R's Custom Jewelry sells a single product. 700 units were sold resulting in $7,000 of sales revenue,
$2,800 of variable costs, and $1,200 of fixed costs.
1. Breakeven point in units is:
A) 200 units B) 300 units C) 500 units D) Other
2. The number of units that must be sold to achieve $6,000 of operating income is:
A) 1,000 units B) 1,166 units C) 1,200 units D) Other

24- Answer the questions (1:6) using the information below:

ABC Company was concerned that increased sales didn’t result in increased profits for 2022.
Both variable unit and total fixed manufacturing costs for 2021 and 2022 remained constant at
$20 and $2,000,000 respectively.
In 2021, the company produced 100,000 units and sold 80,000 units at a price of $50 per unit.
There was no beginning inventory in 2021. In 2022, the company made 70,000 units and sold
90,000 units at a price of $50. Selling and administrative expenses were all fixed at $100,000
each year. After Preparing income statement for each year using absorption costing and
variable costing answer the following questions:
1- By using absorption costing, ABC gross profit for the year 2022 are:

A) 4,000,000 B) 4,500,000 C) 800,000 D) 300,000

2- By using absorption costing, ABC operating income for the year 2021 are:
A) 700,000 B) 200,000 C) 800,000 D) 300,000
3-By using absorption costing, ABC beginning inventory for the year 2022 are:
A) 700,000 B) 200,000 C) 800,000 D) 300,000
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4-By using variable costing, ABC contribution margin for the year 2021 are:
A) 4,000,000 B) 4,500,000 C) 2,400,000 D) 2,700,000
5-By using variable costing, ABC operating income for the year 2022 are:
A) 700,000 B) 200,000 C) 600,000 D) 300,000
6-The differences between net income according to absorption costing and variable costing
for the year 2022 are:
A) 400,000 B) 600,000 C) 800,000 D) 1,000,000

25- R Company has a current production level of 20,000 units per month. Unit costs at this level are:
Direct materials $0.25
Direct labor 0.40
Variable overhead 0.15
Fixed overhead 0.20
Marketing - fixed 0.20
Marketing/distribution - variable 0.40
Current monthly sales are 18,000 units. Jim Company has contacted R Company about purchasing 1,500
units at $2.00 each. Current sales would NOT be affected by the one-time-only special order, and variable
marketing/distribution costs would NOT be incurred on the special order. What is R Company's change in
operating profits if the special order is accepted?
A) $400 increase in operating profits B) $400 decrease in operating profits
C) $1,800 increase in operating profits D) $1,800 decrease in operating profits
26- Answer the questions (1: 3) using the information below:
D's Engine Company manufactures part TE456 used in several of its engine models. Monthly production
costs for 1,000 units are as follows:
Direct materials $ 20,000
Direct labor 5,000
Variable overhead costs 15,000
Fixed overhead costs 10,000
Total costs $50,000
It is estimated that 10% of the fixed overhead costs assigned to TE456 will no longer be incurred if the
company purchases TE456 from the outside supplier. D's Engine Company has the option of purchasing
the part from an outside supplier at $42.50 per unit.
1- If D's Engine Company accepts the offer from the outside supplier, the monthly avoidable costs (costs
that will no longer be incurred) total:
A) $ 41,000 B) $ 49,000 C) $ 25,000 D) $50,000
2- If D's Engine Company purchases 1,000 TE456 parts from the outside supplier per month, then its
monthly operating income will:
A) increase by $1,000 B) increase by $40,000
C) decrease by $1,500 D) decrease by $42,500
3- The maximum price that D's Engine Company should be willing to pay the outside supplier is:
A) $40 per TE456 part B) $41 per TE456 part
C) $49 per TE456 part D) $50 per TE456 part

27- Answer the questions (1:2) using the information below:

S Corporation currently manufactures a subassembly for its main product. The costs per unit are as
follows:
Direct materials $ 1.00
Direct labor 10.00
Variable overhead 5.00
Fixed overhead 8.00
Total $24.00
B Company has contacted S with an offer to sell them 5,000 of the subassemblies for $22.00 each. S will
eliminate $25,000 of fixed overhead if it accepts the proposal.
1- What are the relevant costs for S?
A) $140,000 B) $125,000 C) $105,000 D) $80,000
6|Page M&M&M
2-Should S make or buy the subassemblies? What is the difference between the two alternatives?
A) Buy; savings = $20,000 B) Buy; savings = $50,000
C) Make; savings = $60,000 D) Make; savings = $5,000

Essay Questions
Q1:
ALI Inc. had the following activities during 2022:
Direct materials:
Beginning inventory $ 20,000
Purchases 61,600
Ending inventory 10,400
Direct manufacturing labor 16,000
Manufacturing overhead 12,000
Beginning work-in-process inventory 800
Ending work-in-process inventory 4,000
Beginning finished goods inventory 24,000
Ending finished goods inventory 16,000
Required:
a. What is the cost of direct materials used during 2022?
b. What is cost of goods manufactured for 2022?
c. What is cost of goods sold for 2022?
d. What amount of prime costs was added to production during 2022?
e. What amount of conversion costs was added to production during 2022?

Answer(1):
a. $20,000 + $61,600 - $10,400 = $71,200
b. $71,200 + $16,000 + $12,000 + $800 - $4,000 = $96,000
c. $96,000 + $24,000 - $16,000 = $104,000
d. $71,200 + $16,000 = $87,200
e. $16,000 + $12,000 = $28,000

Q2:
ALI Manufacturing Company had the following account balances for the quarter ending March 31, unless
otherwise noted:
Work-in-process inventory (January 1) $ 140,400
Work-in-process inventory (March 31) 171,000
Finished goods inventory (January 1) 540,000
Finished goods inventory (March 31) 510,000
Direct materials used 378,000
Indirect materials used 84,000
Direct manufacturing labor 480,000
Indirect manufacturing labor 186,000
Property taxes on manufacturing plant building 28,800
Salespersons' company vehicle costs 12,000
Depreciation of manufacturing equipment 264,000
Depreciation of office equipment 123,600
Miscellaneous plant overhead 135,000
Plant utilities 92,400
General office expenses 305,400
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 Marketing distribution costs 30,000
Required:
a. Prepare a cost of goods manufactured schedule for the quarter.
b. Prepare a cost of goods sold schedule for the quarter.

Answer(2):
a. ALI Manufacturing Company
Cost of Goods Manufactured Schedule
For quarter ending March 31

Direct materials used $ 378,000

Direct manufacturing labor 480,000
Manufacturing overhead
Depreciation of manufacturing equipment $264,000
Indirect manufacturing labor 186,000
Indirect materials 84,000
Miscellaneous plant overhead 135,000
Plant utilities 92,400
Property taxes on building 28,800 790,200
Manufacturing costs incurred $1,648,200
Add beginning work-in-process inventory 140,400
Total manufacturing costs $1,788,600
Less ending work-in-process inventory (171,000)
Cost of goods manufactured $1,617,600
b. ALI Manufacturing Company
Cost of Goods Sold Schedule
For the quarter ending March 31
Beginning finished goods inventory $ 540,000
Cost of goods manufactured 1,617,600
Cost of goods available for sale 2,157,600
Ending finished goods inventory (510,000)
Cost of goods sold $1,647,600

Q3:
As part of his job as cost analyst, AMR collected the following information concerning the operations of
the Machining Department:
Observation Machine-hours Total Operating Costs
January 4,000 $45,000
February 4,600 49,500
March 3,800 45,750
April 4,400 48,000
May 4,500 49,800
Required:
a. Use the high-low method to determine the estimating cost function with machine-hours as the
cost driver.
b. If June's estimated machine-hours total 4,200, what are the total estimated costs of the
Machining Department?

Answer(3):
a. VARIABLE COST = ($49,500 - $45,750) / (4,600 - 3,800) = $4.6875 per machine-hour
FIXED COST = $49,500 - ($4.6875 × 4,600) = $27,937.50
8|Page M&M&M
 TOTAL COST = $27,937.50 + $4.6875X
b. June's TOTAL COST = $27,937.50 + $4.6875 × 4,200 = $47,625

Q4:
Renad Auto Company manufactures a part for use in its production of automobiles. When 10,000 items
are produced, the costs per unit are:
Direct materials $ 12
Direct manufacturing labor 60
Variable manufacturing overhead 24
Fixed manufacturing overhead 32
Total $128
Retal Company has offered to sell Renad Auto Company 10,000 units of the part for $120 per unit. The plant
facilities could be used to manufacture another part at a savings of $180,000 if Renad Auto accepts the
supplier's offer. In addition, $20 per unit of fixed manufacturing overhead on the original part would be
eliminated.
Required:
a. What is the relevant per unit cost for the original part?
b. Which alternative is best for Renad Auto Company? By how much?

Answer(4):
a. Direct materials $12
Direct manufacturing labor 60
Variable manufacturing overhead 24
Avoidable fixed manufacturing overhead 20
Total relevant per unit costs $116

b. Make Buy Effect of Buying

Purchase price $1,200,000 $(1,200,000)
Savings in space (180,000) 180,000
Direct materials $120,000 120,000
Direct manufacturing labor600,000 600,000
Variable overhead 240,000 240,000
Fixed overhead saved (200,000) 200,000
Totals $960,000 $820,000 $140,000

Q5:
ABC firm’s capacity is 5,000 units of product (X). it produces and sell 4,000 units. Variable cost per unit is
45 and the selling price is 60. The firm received a special order of 500 units with variable cost of 50 and
selling price of 60. Total fixed cost is 40,000.
Required: should the firm ABC accept the offer

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Answer (5) :
CURRENTLY S. ORDER TOTAL
SALES 240,000 30,000 270,000
VARABLE COST (180,000) (25,000) (205,000)
CONTRIBUTION MARGIN 60,000 5,000 65,000
FIXED COST (40,000) 0 (40,000)
NET INCOME 20,000 5,000 25,000

Advise: they should accept the offer.

Q6:

Income statement (currently)

PRODUCT A PRODUCT B PRODUCT C TOTAL

SALES 60,000 50,000 40,000 150,000
VARIABLE COST (45,000) (40,000) (30,000) (115,000)
CONTRIBUTION
15,000 10,000 10,000 35,000
MARGIN
FIXED COST
AVOIDABLE (5,000) (5,000) (5,000) (15,000)
UN AVOIDABLE (2,000) (1,000) (6,000) (9,000)
NET INCOME 8,000 4,000 (1,000) 11,000
Income statement (NEW)
PRODUCT A PRODUCT B PRODUCT F TOTAL
SALES 60,000 50,000 50,000 160,000
VARIABLE COST (45,000) (40,000) (40,000) (125,000)
CONTRIBUTION
15,000 10,000 10,000 35,000
MARGIN
FIXED COST
AVOIDABLE (5,000) (5,000) (3,000) (13,000)
UN AVOIDABLE (2,000) (1,000) (0) (9,000)
NET INCOME 8,000 4,000 7,000 13,000

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  (9000) = 2000 + 1000 + 6000: unavoidable of product c

Advise: is to drop product c and add product f where company could achieve net profit of 13,000
instead of 11,000

Q7:

ABC Company manufactures part 4A that is used in one of its products. The unit product cost of
this part is:
Direct materials $9
Direct labor 5
Variable overhead 1
Depreciation of special equip. 3
Supervisor's salary 2
General factory overhead 10
Unit product cost $ 30
 The special equipment used to manufacture part 4A has no resale value.
 The total amount of general factory overhead, which is allocated on the basis of direct labor hours,
would be unaffected by this decision.
 The $30 unit product cost is based on 20,000 parts produced each year.
 An outside supplier has offered to provide the 20,000 parts at a cost of $25 per part. Should we
accept the supplier’s offer?

Answer (7) :

Cost of Making (per unit)=17

Cost of Buying (per unit)=25
Do not accept the supplier’s offer.

11 | P a g e M&M&M
Q8:

Answer (8) :
1- Contribution Margin per unit (CM/u) = selling price – variable cost per unit = 250 – 150 = 100 / unit .

2- Contribution Margin Ratio (CM %) = Contribution Margin / sales revenue = 40,000 / 100,000 = 40% .

3- Break-Even Formula-dollar = Total Fixed Costs / CM % = 35,000 / 0.4 = $87,500 .

4- Break-Even Formula-Units = Total Fixed Costs / CM per unit = 35,000 / 100 = 350 unit .

5- Unit sale to attain target profit = (Total Fixed Costs + target profit) / Contribution Margin per
unit = (35,000 + 40,000) / 100 = 750 unit .

6- Degree of Operating Leverage = Contribution Margin / Profit before Taxes = 40,000 / 5000 = 8
degree .

7- Margin of Safety Percentage = (Actual units sales – break even units) / Actual unit sales = (400
– 350) / 400 = 12.5 % .

8- Yes, because net income will increase by 2,000 (7,000 – 5,000)

Net sales(520 units) 130,000
(-) variable cost (78,000)
= contribution margin 52,000
(-) fixed cost (45,000)
=net income 7,000

12 | P a g e M&M&M
Q9:
Below is an income statement for ALI Company:
Sales $400,000
Variable costs (125,000)
Contribution margin $275,000
Fixed costs (200,000)
Profit before taxes $ 75,000

1. What is ALI’s degree of operating leverage?

2. Based on the cost and revenue structure on the income statement, what was ALI’s break-even
point in dollars?
3. What was ALI’s margin of safety in dollars?
4. Assuming that the fixed costs are expected to remain at $200,000 for the coming year and the
sales price per unit and variable costs per unit are also expected to remain constant, how much
profit before taxes will be produced if the company anticipates sales for the coming year rising to
130 percent of the current year’s level?

Answer (9) :
1. Degree of Operating Leverage (DOL) = Contribution Margin / Profit Before Taxes =
DOL= 275,000 / 75,000= 3.67

2. Break-Even Point in Dollars

-Break-Even Sales= Fixed Costs / Contribution Margin Ratio
-Contribution Margin Ratio = Contribution Margin / Sales = 275,000/400,000 = 0.6875
- Break-Even Sales = 200,000 / 0.6875 = 290,909.09

3. Margin of Safety in Dollars = Actual Sales − Break-Even Sales = 400,000 − 290,909.09 = 109,090.91

4. Profit Before Taxes at 130% Sales Level :

-Anticipated Sales = 1.30 × 400,000 = 520,000
-Variable Costs=125,000/400,000×520,000=162,500
-Anticipated Contribution Margin=Anticipated Sales−Anticipated Variable Costs= 520,000−162,500=357,500
- Anticipated Profit Before Taxes=Anticipated Contribution Margin−Fixed Costs= 357,500−200,000=157,500

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