Question
The Contribution income statement for Deines Corporation presented below shows the operating results for the fiscal year just ended. Deines had sales of 1,800 tons
The Contribution income statement for Deines Corporation presented below shows the operating results for the fiscal year just ended. Deines had sales of 1,800 tons of product during that year. The manufacturing capacity of Deines facilities is 3,000 tons of product. Revenues 900,000$
Variable cost:
Manufacturing 315,000$
Nonmanufacturing 180,000 495,000
Contribution margin 405,000
Fixed cost:
Manufacturing 90,000
Nonmanufacturing 157,500 247,500
Operating income 157,500
- If the sales volume is estimated to be 2,100 tons for next year, and if the selling price and cost-behavior patterns remain the same next year, how much net income does Deines expect to earn next year?
Assume Deines estimates the selling price per ton will decline 10% next year, variable cost will increase by $40 per ton, and total fixed costs will not change. Compute how many tons must be sold next year to earn net income of $94,500.
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