Answer: $122500
Explanation:
The income if sales are $325,000 will be calculated as thus:
Sales = $325,000
Less: Variable cost = $130000
Contribution margin = $195,000
Less: Fixed cost = $72,500
Income before tax = $195,000 - $72500 = $122500
Note:
Variable cost = 40% × Sales
= 40% × $325000
= 0.4 × $325,000
= $130000
Contribution margin = 60% × Sales
= 60% × $325000
= 0.6 × $325,000
= $195000
