In 2010 Masset sold 3000 units at 500 each Variable expenses

In 2010, Masset sold 3,000 units at $500 each. Variable expenses were $350 per unit, and fixed expenses were $200,000. What was Masset s 2010 net income?

a) $250,000

b) $450,000

c) $1,050,000

d) $1,500,000

Solution

Contribution margin=Sales-Variable expenses

=(500-350)=$150 per unit

Total Contribution margin=$150*3000 units

=$450,000

Less:Fixed costs=($200,000)

Net income=$250,000.