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Answer :
Final answer:
This year's net income for the manufacturer will be $1,924,000.00.
Explanation:
To calculate the net income, we need to consider the revenue, variable costs, and fixed costs.
Revenue is the total amount of money earned from selling the products. In this case, the manufacturer sells each oven for $1,600.00, and the expected sales volume for this year is 4,200 units. Therefore, the total revenue can be calculated as:
Total Revenue = Selling Price per Unit x Sales Volume
Total Revenue = $1,600.00 x 4,200
Total Revenue = $6,720,000.00
Variable costs are the costs that vary with the production volume. In this case, the variable cost per unit is $680.00, and the sales volume is 4,200 units. Therefore, the total variable costs can be calculated as:
Total Variable Costs = Variable Cost per Unit x Sales Volume
Total Variable Costs = $680.00 x 4,200
Total Variable Costs = $2,856,000.00
Fixed costs are the costs that remain constant regardless of the production volume. In this case, the annual fixed costs are $1,940,000.00.
Now, we can calculate the net income:
Net Income = Total Revenue - Total Variable Costs - Fixed Costs
Net Income = $6,720,000.00 - $2,856,000.00 - $1,940,000.00
Net Income = $1,924,000.00
Therefore, this year's net income for the manufacturer will be $1,924,000.00.
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