Question

ABC Company sells its inventory to customers for $50 per
unit. During May, ABC Company had total fixed costs of
$200,000 and needed to sell 10,000 units in order to
break-even. ABC Company's actual sales in May amounted
to 26,352 units.

Calculate ABC Company's net income for May.

Answer 1

Break Even Point in units    =   Fixed Costs / contribution per unit                            10,000 units                    = $200,000 / contribution per unit                      contribution per unit       = $200,000 / 10,000                                                                        =   $20 per unit

Sale price (-) variable cost   = contribution per unit     $50 (-) variable cost            =   $20                     variable cost          =   $50 (-) $20 = $30 per unit

Particulars	Amount (in $)
Sales (26,352 x $50 per unit)	$1,317,600
Less : variable Costs (26,352 x $30 per unit)	($790,560)
contribution	$527,040
Less: Fixed Costs	($200,000)
Net Income	$327,040