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Net Income

The Walton Company produces a specific item with the following information:

Sales Price \$400 per unit
Variable Costs \$100 per unit
Fixed Costs \$150,000
Units Produced and Sold 2,000

1) Calculate Net Income
2) Calculate the Contribution Margin per unit
3) Calculate the Contribution Margin Ratio
4) If the Walton Company sells 500 more additional units, by what amount will net income increase?
5) If the Walton Company has an additional \$20,000 in sales, by what amount will net income increase?

Solution Preview

The Walton Company produces a specific item with the following information:
Sales Price \$400 per unit
Variable Costs \$100 per unit
Fixed Costs \$150,000
Units Produced and Sold 2,000

1)      Calculate Net Income

Units Produced and Sold= 2,000
Selling Price= \$400 per unit
Variable cost= \$100 per unit

Revenue \$800,000 =2,000. x \$400.
Less Variable Cost \$200,000 =2,000. x \$100.
Contribution \$600,000 =\$800,000.-\$200000.
Less Fixed Cost \$150,000
Net Income \$450,000 =\$600,000.-\$150000.