# 29

A company produces and sells 10,000 widgets, resulting in a profit of $20,000. The contribution margin ratio on this product is 40%. Fixed costs for the company are $75,000. The company is hoping to to increase sales and production by 5,000 units. Although variables per unit will stay the same, an additional investment of $5,000 will be required for this new level of sales.

What will be the increase in net income for the production and sale of the additional 5,000 units ?

$5,000

$10,000

$42,500

$44,500

$62,500