Purchase Solution

Desired profit and net income

Not what you're looking for?

Ask Custom Question

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

Purchase this Solution
Solution Summary

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

Solution Preview

42. Net income will increase by contribution of 100 units.
Contribution per unit is 300000/20000= ...

Purchase this Solution
Free BrainMass Quizzes
SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

View More Free Quizzes
Related BrainMass Solutions

  • Pharoah Company: Number of Units and Selling Price

    645804 Pharoah Company: Number of Units and Selling Price Pharoah Company had $296,300 of net income in 2019 when the selling price per unit was $154, the variable costs per unit were $90, and the fixed costs were $574,100.

  • How do you calculate profit margin that would give the required return on equity?

    We first calculate the net income needed ROE = Net Income/Equity 9.25% = Net Income/500,000 (since there is no debt, all assets = all equity) Net income = 500,000X9.25% = 46,250 Required profit margin = Net income/Sales Required profit margin =

  • Profit Margin

    = 56,250 Profit Margin = Net Income/Sales Profit Margin needed = 56,250/520,000 = 10.82% The solution explains how to determine the profit margin needed to get a desired ROE

  • Hamby Company, Markowis Company, Lynn Company

    What would the selling price have to be in order to reach the stockholders' desired profit level?

  • Total sales have to be in order to achieve net income

    the steps to calculate the total sales have to be in order to achieve desired net income

  • This post addresses multi-step income statement analysis.

    Her net income is $73,600, which is also below the $90,000 desired net income level. She should definitely not undertake the expansion, because her income and gross profit percentages are below the recommended levels.

  • Basic Word Problems in Algebra

    Gross profit for 2011=Net Sales-Cost of goods sold=97195-82127=$15,068 Gross profit for 2011=Net Sales-Cost of goods sold=92586-72318=$20,268 Net Income for 2011=Gross profit-Operating expenses=15068-4041=$11,027 Net Income for 2012=Gross profit-Operating

  • Unit Sales and Degree of Operating Leverage

    leverage = Contribution / Net income = $84000/12200 This solution provides calculations for unit sales and degree of operating leverage.

  • Break even analysis

    $20.00 per unit= $160,000 Fixed Cost= $50,000 Total Cost= $210,000 Net Income= $30,000 This is the profit that was desired Price for breakeven and for earning a profit have been calculated

View More Related Solutions