Profit calculation using contribution margin

Steps:

• Last year total contribution = 2000 × $50 =$100,000; fixed costs = $100,000 -$6,000 = $94,000.
• This year units sold = 2000 × 1.1 = 2200.
• This year contribution per unit = $50 × (1 - 0.25) =$37.5.
• This year total contribution = 2200 × $37.5 =$82,500; profit = $82,500 - fixed costs.

Not enough information (fixed costs this year unknown; assuming same gives -$11,500, not an option).

Why B is correct:

• B matches a common error applying 25% decrease directly to last year's profit ($6,000 × 0.75 =$4,500), ignoring volume change and fixed costs.

Why the others are wrong:

• A: Overestimates by assuming no contribution decrease ($2200 ×$50 - $94,000 ≈$16,000, not $45,000).
• C: Assumes no change in profit despite volume and contribution shifts.
• D: Grossly overestimates total contribution without subtracting fixed costs.

Final answer: Not enough information.