The DesMaris Company had the following income statement for the month of November 2014: If the monthly sales volume increases by 450 units, DesMaris Company's monthly profits will increase by

Question

The DesMaris Company had the following income statement for the month of November 2014:  If the monthly sales volume increases by 450 units, DesMaris Company's monthly profits will increase by

Quizplus · Accepted Answer

To calculate the increase in monthly profits, we need to first calculate the contribution margin per unit.

Contribution margin per unit = Sales price per unit - Variable cost per unit

Contribution margin per unit = $60 - $30

Contribution margin per unit = $30

Next, we need to calculate the total increase in contribution margin with the increase in sales volume.

Total increase in contribution margin = Contribution margin per unit x Increase in sales volume

Total increase in contribution margin = $30 x 450

Total increase in contribution margin = $13,500

Therefore, the monthly profits will increase by $13,500 if the sales volume increases by 450 units. Hence, the correct answer is A) $13,500.00.

The DesMaris Company Had the Following Income Statement for the Month