Reference no: EM131921283

Question - Problem related to Contribution Margin. Assume a company produces 90 cars with VC of $9,000 per vehicle and $200,000 in fixed costs. Let's also assume the cars' unit selling price is set at $12,000.

1. Questions: What would net income be if the company sells all 90 cars in the same year using the TRADITIONAL income statement? What would net income be using the CONTRIBUTION margin approach??

2. Questions: What if the company sold only 80 cars; what would be net income using the traditional income statement? What about the contribution margin income statement?

3. Questions: Assuming finished goods inventory was zero at the beginning of the year, what would be the balance of this account if the company sold all 90 cars? What would it be if it sold 80 cars?