Homework Answers
At the 20,000 units the Firm will break even. It means that the Fixed cost will be fully covered when 20,000 units are produced. The contribution of units over and above 20,000 will give the net income of the firm.
Net Income = (Total Units - Break even unit) * contribution Margin
= (30,000 - 20,000) * 3
= 30,000
Net Income will be 30,000
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