Using this information, what is Your Company's Your Company's expected net income when 5,000 units are sold? Use the information in red to figure out total fixed costs.Expected sales in unitsSales price per unit5,000$203,750Expected - BreakevenMargin of safety in units35%Contribution margin ratioO A. $35,000O B. $25,000O C. $18,750O D. $26,250O E. $ 8,750

Option D Or $26250 Sales (5000 × $20) $100000 Less : Variable Cost (1 - 0.35) × Sales $65000…

Answered: this information, what is Your…

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this information, what is Your Company's Your Company's expected net income when 5,000 units are sold? Use the in

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2BE: Contribution margin Waite Company sells 250,000 units at 120 per unit. Variable costs are 78 per...

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Question

Using this information, what is Your Company's Your Company's expected net income when 5,000 units are sold? Use the information in red to figure out total fixed costs.
Expected sales in units
Sales price per unit
5,000
$20
3,750
Expected - Breakeven
Margin of safety in units
35%
Contribution margin ratio
O A. $35,000
O B. $25,000
O C. $18,750
O D. $26,250
O E. $ 8,750

Expert Solution

Step 1

Option D Or $26250

Sales (5000 × $20)	$100000
Less : Variable Cost (1 - 0.35) × Sales	$65000
Contribution	$35000
Less : Fixed Cost	$8750
Net Income	$26250

Calculation of Contribution per Unit :-

Total Units sold 5000 units

Margin of safety units are 3750

Therefore Break even Sales Units are 1250 (5000 - 3750) units.

Break even Sales in Dollar

=1250 units × $20

=$25000

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