Wilkinson Company sells its single product for $30 per unit. The contribution margin ratio is 45% and Wilkinson has fixed costs of $10,000 per month. If 3,000 units are sold in the current month, Wilkinson's income would be:
A) $30,500.
B) $49,500.
C) $40,500.
D) $90,000.

Question

Quizplus · Accepted Answer

Wilkinson's income would be $30,500 as shown below.
Income = (Contribution margin x selling price x units) - Fixed costs
= (.45 x $30 x 3,000) - $10,000
= $30,500

Wilkinson Company Sells Its Single Product for $30 Per Unit