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Sunn Company manufactures a single product that sells for $160 per unit and whose variable costs are $128 per unit. The company's annual fixed costs are $625,000. The sales manager predicts that next year's annual sales of the company's product will be 39,500 units at a price of $195 per unit. Variable costs are predicted to increase to $135 per unit, but fixed costs will remain at $625,000. What amount of income can the company expect to earn under these predicted changes? Prepare a contribution margin income statement for the next year. SUNN COMPANY Contribution Margin Income Statement S per unit Contribution margin Units

Sunn Company manufactures a single product that sells for $160 per unit and whose variable costs are $128 per unit. The company's annual fixed costs are $625,000. The sales manager predicts that next year's annual sales of the company's product will be 39,500 units at a price of $195 per unit. Variable costs are predicted to increase to $135 per unit, but fixed costs will remain at $625,000. What amount of income can the company expect to earn under these predicted changes? Prepare a contribution margin income statement for the next year. SUNN COMPANY Contribution Margin Income Statement S per unit Contribution margin Units

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sunn Company manufactures a single product that sells for $160 per unit and whose variable costs are $128 per unit. The company's annual fixed costs are $625,000. The sales manager predicts that next year's annual sales of the company's product will be 39,500 units at a price of $195 per unit. Variable costs are predicted to increase to $135 per unit, but fixed costs will remain at $625,000. What amount of income can the company expect to earn under these predicted changes? Prepare a contribution margin income statement for the next year. SUNN COMPANY Contribution Margin Income Statement $ per unit Contribution margin Units
Transcribed Image Text:Sunn Company manufactures a single product that sells for $160 per unit and whose variable costs are $128 per unit. The company's annual fixed costs are $625,000. The sales manager predicts that next year's annual sales of the company's product will be 39,500 units at a price of $195 per unit. Variable costs are predicted to increase to $135 per unit, but fixed costs will remain at $625,000. What amount of income can the company expect to earn under these predicted changes? Prepare a contribution margin income statement for the next year. SUNN COMPANY Contribution Margin Income Statement $ per unit Contribution margin Units
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