Answer (D) is correct . Additional annual sales are 30,000 units at $20 per unit. If variable costs are expected to be $12 per unit, the unit contribution margin is $8, and the total contribution margin is 240,000.
Answer (A) is incorrect because The amount of $57,600 multiplies the annual increase in contribution margin by the tax rate instead of the PV factor.
Answer (B) is incorrect because The amount of $92,160 is based on only 1 year’s results, not 4.
Answer (C) is incorrect because The amount of $273,600 improperly includes fixed costs in the calculation of the contribution margin.
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The expected incremental sales will provide a contribution margin over
