Please answer Question B, I have shown the process of Question A.

XYZ, Inc. has total fixed costs of $25,000.

1. If the companys contribution margin is 60%, the income tax rate is 25% and the selling price of one widget is $20, how many widgets would the company need to sell to produce a net income of $15,000? Be prepared to explain how you reached your answer in class.

   1. Contribution Margin per box = 20 * 60% = $12

   2. Desired Net Income Net income before tax = 15,000/ (1-0.25) = 20,000

   3. Number of boxes = Fixed cost + Desired Net income (Before Tax)/ Contribution Margin Per Box

   Number of Boxes = (25,000+20,000)/12 = 3,750 boxes

2. How would you approach the same problem if you weren't given the contribution percentage but were given the fact that the variable costs of a widget were $8?