Question

Binford Corporation's contribution margin ratio is 58%, and its fixed monthly expenses are $94,000. Assume that the company's sales for May are expected to be $178,000.

Required:
Estimate the company's net operating income for May, assuming that the fixed monthly expenses do not change.

Answer 1

$9,240

Step-by-step explanation:

Calculation to Estimate the company's net operating income for May, assuming that the fixed monthly expenses do not change

Using this formula

Net operating income = (CM ratio × Sales) - Fixed expenses

Let plug in the formula

Net operating income= (0.58× $178,000) - $94,000

Net operating income= $103,240 - $94,000

Net operating income= $9,240

Therefore the company's net operating income for May, assuming that the fixed monthly expenses do not change is $9,240