Question

In 2022, sunland company sold 3000 units at $1100 each. unit variable costs were $770, and fixed expenses were $230000. what was sunland's 2022 net income?

a. $760000
b. $2310000

Answer 1

Sunland Company's 2022 net income was $760,000, calculated by subtracting the variable costs and fixed expenses from the total sales revenue.

Step-by-step explanation:

Sunland Company's 2022 net income can be calculated by subtracting both the variable and fixed costs from the total sales revenue. The total revenue is obtained by multiplying the number of units sold by the sales price per unit. Then, the total variable costs are found by multiplying the unit variable cost by the number of units sold. After calculating both these figures, we can identify the contribution margin and then deduct the fixed costs to determine the net income.

The total sales revenue is 3000 units × $1100/unit = $3,300,000. Total variable costs are 3000 units × $770/unit = $2,310,000. Hence, the contribution margin is $3,300,000 - $2,310,000 = $990,000. After subtracting the fixed expenses of $230,000 from the contribution margin, we get the net income:

$990,000 - $230,000 = $760,000.