# Desired profit and net income

Please help with the following problem.

Use the following to answer questions 42-43:

The following is Addison Corporation's contribution format income statement for last month:

Sales $1,000,000

Less variable expenses 700,000

Contribution margin 300,000

Less fixed expenses 180,000

Net income $ 120,000

The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month.

42. If sales increase by 100 units, by how much should net income increase?

A) $ 400 C) $1,500

B) $4,800 D) $2,500

43. How many units would the company have to sell to attain target profits of $150,000?

A) 22,000 C) 25,000

B) 37,500 D) 26,667

https://brainmass.com/business/accounting/desired-profit-net-income-54197

#### Solution Preview

42. Net income will increase by contribution of 100 units.

Contribution per unit is 300000/20000= ...

#### Solution Summary

This explains the computation of units to earn desired profit and net income. Step by step calculations are given for each.