Last year, Jasper Company earned operating income of $139,600 with a contribution margin ratio of 0.3. Actual revenue was $237,000. Calculate the total fixed cost. Round your answer to the nearest dollar.
To calculate the total fixed cost, we need to use the contribution margin ratio and the actual revenue.
The contribution margin ratio is calculated by dividing the operating income by the actual revenue:
Contribution margin ratio = Operating income / Actual revenue
0.3 = $139,600 / $237,000
Now, let's solve for the operating income:
Operating income = Contribution margin ratio * Actual revenue
Operating income = 0.3 * $237,000
Operating income = $71,100
Finally, to calculate the total fixed cost, we need to subtract the operating income from the actual revenue:
Total fixed cost = Actual revenue - Operating income
Total fixed cost = $237,000 - $71,100
Total fixed cost = $165,900
Therefore, the total fixed cost for Jasper Company is approximately $165,900.