To calculate net income for Denim Inc., subtract fixed costs from the total contribution margin, which is the product of contribution margin per unit (calculated by subtracting variable cost per unit from selling price per unit) and the number of units sold. For 1,350 printers sold, the net income is $157,300.00.
Step-by-step explanation:
To calculate the net income for Denim Inc. in a week when 1,350 printers are sold, we need to apply the contribution margin approach. First, we need to calculate the contribution margin per unit, which is the selling price per unit minus the variable cost per unit. Then we multiply this by the number of units sold to determine the total contribution margin. Finally, we subtract the fixed costs from the total contribution margin to find the net income.
Selling price per unit: $255.00
Variable cost per unit: $57.00
Fixed costs per week: $110,000.00
Number of units sold: 1,350
First, we calculate the contribution margin per unit:
Contribution margin per unit = Selling price per unit - Variable cost per unit
Contribution margin per unit = $255.00 - $57.00
Contribution margin per unit = $198.00
Now, we find the total contribution margin for 1,350 units:
Total contribution margin = Contribution margin per unit x Number of units sold
Total contribution margin = $198.00 x 1,350
Total contribution margin = $267,300.00
Finally, we calculate the net income:
Net income = Total contribution margin - Fixed costs
Net income = $267,300.00 - $110,000.00
Net income = $157,300.00
Therefore, the net income in a week where 1,350 printers are sold would be $157,300.00.