65. Contribution margin $200,000; Less fixed costs $150,000; Net income $50,000. What is the forecasted net income for the sale of 14,000 shoes based on these actual results?
Answer: C
The forecasted net income for the sale of 14,000 shoes is $130,000.
Based on the contribution margin and fixed costs, the forecasted net income can be determined using the actual results as a reference point. Given the fixed costs remain constant, the net income increases proportionally with sales.
A) $40,000
This option is incorrect as it significantly underestimates the forecasted net income. The actual contribution margin and fixed costs suggest a much higher net income based on the sales of 14,000 shoes.
B) $70,000
This option is also incorrect because it does not align with the calculated forecasted net income. The contribution margin from the sales of 14,000 shoes would lead to a net income higher than $70,000.
C) $130,000
This option is correct as it reflects the appropriate calculation based on the contribution margin from selling 14,000 shoes. With a contribution margin of $200,000 and fixed costs of $150,000, the resulting net income is indeed $130,000.
D) $230,000
This option is incorrect as it overestimates the forecasted net income. The addition of contribution margin without considering the fixed costs leads to an unrealistic forecast that does not match the actual results.
Conclusion
The correct answer is $130,000, as it accurately represents the net income after accounting for the contribution margin and fixed costs. All other options fail to consider the proper relationship between revenues and costs, leading them to miscalculate the forecasted net income based on the provided data.