Question

ABC Manufacturing has total fixed costs of $460,000. A unit of product sells for $20 and variable costs per unit are $11. Prepare a contribution margin income statement showing predicted net income (loss) if ABC sells 100,000 units for the year ended December 31.

Answer 1

Net Income (Loss) = $440,000

Step-by-step explanation:

Total Fixed Cost = $460000

Total Variable Cost = $11 * 100,000 unit = $1100000

Total Revenue = $20 * 100,ooo unit = $2000000

Contribution Margin = TR- TVC = ($200,000 - $1,100,000) = -$900,000

Net Income = Contribution margin - Total Fixed cost

Net Income (Loss) = $900,000 - $460,000

= $440,000