Homework Answers
| A. Total Income if all titles were produced = $90,000 |
Working:
| Title X | Title Y | Title Z | Total | |
| Sales | $ 100,000.00 | $ 150,000.00 | $ 200,000.00 | $ 450,000.00 |
| Less: Variable cost | $ 50,000.00 | $ 75,000.00 | $ 100,000.00 | $ 225,000.00 |
| Contribution Margin | $ 50,000.00 | $ 75,000.00 | $ 100,000.00 | $ 225,000.00 |
| Direct Fixed Cost | $ 20,000.00 | $ 30,000.00 | $ 40,000.00 | $ 90,000.00 |
| Common Fixed Cost | $ 10,000.00 | $ 15,000.00 | $ 20,000.00 | $ 45,000.00 |
| Net Income (Loss) | $ 20,000.00 | $ 30,000.00 | $ 40,000.00 | $ 90,000.00 |
| B. If title X is dropped , net income would decrease by $30,000 (90,000-60,000) |
Working:
| Title X | Title Y | Title Z | Total | |
| Sales | $ 150,000.00 | $ 200,000.00 | $ 350,000.00 | |
| Less: Variable cost | $ 75,000.00 | $ 100,000.00 | $ 175,000.00 | |
| Contribution Margin | $ 75,000.00 | $ 100,000.00 | $ 175,000.00 | |
| Direct Fixed Cost | $ 30,000.00 | $ 40,000.00 | $ 70,000.00 | |
| Common Fixed Cost | $ 10,000.00 | $ 15,000.00 | $ 20,000.00 | $ 45,000.00 |
| Net Income (Loss) | $ (10,000.00) | $ 30,000.00 | $ 40,000.00 | $ 60,000.00 |
| C. Title X contribute $20,000 to fixed cost directly . |
| D. The common fixed of $10,000 will still remain if title X is dropped. |
| E. Direct Fixed cost of $20,000 will be eliminated if Title X is dropped. |
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