Question

ssume the following information for a merchandising company: contribution margin$ 104,000variable selling expenses$ 25,000net operating income$ 30,000fixed administrative expenses$ ?fixed selling expenses$ 40,000variable administrative expenses$ 5,000what is the amount of fixed administrative expenses?

Answer 1

The fixed administrative expenses for the merchandising company are $4,000, calculated using the provided financial figures and the formula for net operating income.

Step-by-step explanation:

The question revolves around determining the amount of fixed administrative expenses in a merchandising company, using the given information. To calculate this, we can use the formula: net operating income = contribution margin - (variable selling expenses + variable administrative expenses + fixed selling expenses + fixed administrative expenses). Plugging in the numbers provided, we get:

$30,000 = $104,000 - ($25,000 + $5,000 + $40,000 + fixed administrative expenses)

After doing the math, we find that the fixed administrative expenses are $4,000.