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:

Earned Messaging

Communication efforts or media coverage that a company or individual gains organically, typically through public relations rather than paid advertising.

Charitable Donation

Giving resources, typically money or goods, to support non-profit organizations or causes without expecting anything in return.

Organizational Crisis

A situation that threatens an organization and its stakeholders—for example, shareholders, customers, employees, and the public—and can seriously impact performance and generate negative outcomes.

Management Failures

Situations where leadership and organizational strategies fail to achieve objectives, leading to negative consequences for the company.