Question

Variable costs for Coronado Industries are 30% of sales. Its selling price is $120 per unit. If Coronado sells one unit more than break-even units, how much will profit increase?a. $84 b. $36 c. $72 d. $400

Answer 1

Answer:

Income will increase by $84.

Explanation:

The break-even point is the number of units required to cover the fixed costs. Net income is zero.

First, we need to calculate the unitary variable cost:

Unitary variable cost= 120*0.3= $36

Now, the unitary contribution margin:

unitary contribution margin= 120 - 36

unitary contribution margin= $84

Income will increase by $84.