If total fixed costs are $350,000, contribution margin per unit is $7.50, the tax rate is 30%, and the number of units to be sold is 100,000, then the after?tax net income will be _____.
A)$280,000
B)$350,000
C)$400,000
D)$877,500

Question

Quizplus · Accepted Answer

To calculate the after-tax net income, first, find the total contribution margin by multiplying the contribution margin per unit by the number of units sold: $7.50 * 100,000 = $750,000. Then, subtract the total fixed costs from the total contribution margin to get the pre-tax income: $750,000 - $350,000 = $400,000. Finally, calculate the after-tax net income by subtracting the taxes (30% of $400,000) from the pre-tax income: $400,000 - ($400,000 * 0.30) = $400,000 - $120,000 = $280,000.

If Total Fixed Costs Are $350,000, Contribution Margin Per Unit