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Homework answers / question archive / 3)A company has the following data: Sales 3,000 units Sales Price $70 per unit Variable c
3)A company has the following data:
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Sales |
3,000 units |
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Sales Price |
$70 per unit |
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Variable c. |
$50 per unit |
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Fixed Cost |
$25,000 |
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If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other actors factors remain the same, what will the outcome be for net income? |
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Decrease by $31,875. |
C) |
Increase by $20,625. |
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B) |
Decrease by $15,000. |
D) |
Decrease by $3,125. |
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income statement before changes in sales and variable cost -
given that ,
sales in units = 3000
sale price per unit = $70
variable cost per unit = $50
fixed cost = $25000
| particulars | amount |
| sales ( 3000units * $70 per unit) | $210000 |
| less- variable cost (3000 * $50 per unit) | ($150000) |
| contribution (sales - variable cost) | $60000 |
| less - fixed cost | ($25000) |
| Net income | $35000 |
income statement after changes in sales and variable cost -
given that ,
sales volume is decreased by 25%
sales in units = 3000 - 25% = 2250 units
sale price per unit = $70
variable cost per unit will increase by 15%
variable cost per unit = $50 + 15% = $57.5 per unit
fixed cost = $25000.
| particulars | amount |
| sales ( 2250units * $70 per unit) | $157500 |
| less- variable cost (2250 * $57.5 per unit) | ($129375) |
| contribution (sales - variable cost) | $28125 |
| less - fixed cost | ($25000) |
| Net income | $3125 |
net income before changes is = $35000
net income after changes is = $3125
the net income after Change is Decrease by $31,875
answer is (a) Decrease by $31,875.
