Answer (C) is correct . The income statement for a volume of 48,000 units (4,000 per month ¡Á 12 months) would appear as follows. ? Sales ($60 per unit) $2,880,000 Variable manufacturing ($35 per unit) (1,680,000) Variable selling ($5 per unit) (240,000) Contribution margin $ ??960,000 Fixed costs (880,000) Income before tax $ ????80,000 Tax expense (30%) (24,000) Net income $ ????56,000 Answer (A) is incorrect because This amount is the income before the tax expense of $(24,000) ($80,000 ¡Á 30%). Answer (B) is incorrect because This amount is the pre-tax loss if sales volume per year (instead of per month) were 4,000 units. Answer (D) is incorrect because This amount is the after-tax loss if annual sales were 4,000 units.
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