Homework Answers
Answer a.
| Contribution Income statement | 10000 units |
| sales revenue | 300,000 |
| less: variable costs [18*10000] | 180,000 |
| Contribution margin | 120,000 |
| less: fixed costs [70000+12000+13000] | 95000 |
| Net income | 25000 |
| less: income tax | 8750 |
| Net income after tax | 16250 |
Answer b
Desired profit = 14300
Net profit before tax : x - 0.35x = 14300, therefore x = 14300 / 0.65 = 22000
new fixed cost = 95000 - 15000 = 80000
new variable cost = $19 per unit
new selling price =35 per unit
equation is
Profit = Sales - variable cost - fixed cost
let number of units be x so,
22000 = [35x - 19x] - 80000
22000 = 16x - 80000
x = 102000 /16 = 6375 units is the sales volume
Add Answer to:
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