For 2013, Winchester Company sold 80,000 units at a selling price of $20 per unit. Variable cost per unit was $15, and Winchester's net income for the year was $40,000. What was the amount of Winchester's fixed costs?
A) $360,000
B) $440,000
C) $1,160,000
D) $400,000

Question

Quizplus · Accepted Answer

The contribution margin per unit is $5 ($20 - $15). Total contribution margin is $400,000 (80,000 units x $5). Subtracting the net income of $40,000 from the total contribution margin gives fixed costs of $360,000.

For 2013, Winchester Company Sold 80,000 Units at a Selling