Answer
This question involves determining the impact on net income of change in 04 variables namely (i) Sales Volume, (ii) Sales Price, (iii) Fixed Costs and (iv) Variable Costs. It is significantly important to understand how volume and price change impact contribution margin while preparing this analysis.
Work Step by Step
(W-1) : [USD 0.5 × 80% Per Unit] × [5,000,000 × 1.40 units] USD 2,800,000
(W-1) : [USD 0.3 × 90% Per Unit] × [5,000,000 × 1.40 units] USD 1,890,000
(W-3) : USD 900,000 × 80% USD 720,000
