3)A company has the following data: Sales 3,000 units Sales Price $70 per unit Variable c. $50 per unit Fixed Cost

Question

3)A company has the following data: Sales 3,000 units Sales Price $70 per unit Variable c. $50 per unit Fixed Cost $25,000 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? Decrease by $31,875. C) Increase by $20,625. B) Decrease by $15,000. D) Decrease by $3,125.

Help In Homework · Accepted Answer

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.

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3)A company has the following data: Sales 3,000 units Sales Price $70 per unit Variable c

Expert Solution

Archived Solution

Sales		3,000 units
Sales Price		$70 per unit
Variable c.		$50 per unit
Fixed Cost		$25,000
	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?
	Decrease by $31,875.		C)	Increase by $20,625.
B)	Decrease by $15,000.		D)	Decrease by $3,125.

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

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