Answer:
Explanation:
Contribution : Contribution tells the availability of funds. It is computed by taking a difference of sales and variable cost.
The equation to compute net income is shown below:
Sales - Variable cost = Contribution ;
Contribution - Fixed expense = Net income
For computing the foretasted contribution for 2018, the following information is need to be considered which is shown below.
1. As for variable cost, 50% should be recognized i.e 627,888 × 50% = $313,944
2. The fixed cost is increased by $156,000. So the revised fixed cost = 212,000 + $156,000 = $368,000
3. Other things remain same.
The calculation attachment is given below:
