Which is a version of the profit equation that includes contribution margin per unit? Net income = (Contribution margin per unit x number of units sold) - Fixed expenses Net income = (Contribution margin per unit + variable cost per unit) - Fixed expenses Net income = (Contribution margin per unit x fixed cost per unit) - Variable expenses Net income = (Contribution margin per unit x variable cost per unit) - Fixed expenses
Added by Steven O.
Step 1
Total costs can be broken down into fixed costs and variable costs. Therefore, the profit equation can be rewritten as: Profit = (Selling price per unit $\times$ Number of units sold) - (Fixed costs + Variable costs) Show more…
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Total Per Unit Sales (32,000 units) $256,000 $8.00 Variable Expenses 160,000 5.00 Contribution Margin 96,000 $3.00 Fixed Expenses 50,000 Net Operating Income $46,000 1. What is the revised net operating income if the selling price increases by $1.50 per unit, fixed expenses increase by $6,000, and the number of units sold decreases by 4%? Net Operating Income = ? 2. What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 8%? Net Operating Income = ?
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what is the formula for contribution margin per unit
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8. Assume the following information: Amount Per Unit Sales $ 600,000 $ 40 Contribution margin $ 360,000 $ 24 Net operating income $ 240,000 If the selling price per unit increases by 7% and unit sales drop by 5%, then the best of estimate of the new net operating income is: 9. Assume the following information: Amount Selling price $ 30 Variable expense per unit $ 12 Fixed expenses $ 11,500 per month Unit sales 2,070 per month What is the net operating income per month?
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