Reference: 18_05 Thomas Company Has Total Fixed Costs of $360,000 and Variable

question 40

Multiple Choice

Reference: 18_05
Thomas Company has total fixed costs of $360,000 and variable costs of $14 per unit. If the unit sales price is reduced from $24 to $20 and advertising is increased by $10,000, sales will increase from 40,000 to 65,000 units.
-What are the contribution margin and net income under the revised conditions?

• A) $650,000 and $280,000 respectively.
• B) $400,000 and $40,000 respectively.
• C) $280,000 and $40,000 respectively.
• D) $390,000 and $20,000 respectively.
• E) $400,000 and $20,000 respectively.

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Definitions:

Cerebellum

A part of the brain located at the back of the skull, vital for coordinating movement and maintaining balance.

Reticular Formation

A network of neurons located in the brainstem, involved in various functions including regulation of wakefulness and sleep.

Midbrain

A central part of the brainstem that plays an important role in vision, hearing, motor control, sleep/wake, arousal, and temperature regulation.

Medulla

The base of the brainstem; it controls vital life-sustaining functions like heartbeat, breathing, blood pressure, and digestion.