Question

Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November.

Sales (6,900 units) $400,200
Variable expenses 262,200
Contribution margin 138,000
Fixed expenses 103,500
Net operating income $34,500

If the company sells 6,800 units, its net operating income should be closest to:________

a. $33,979
b. $32,500
c. $34,500

Answer 1

b. $32,500

Step-by-step explanation:

The computation of the net operating income is shown below:

Sales ($400,200 ÷ 6,900 × 6,800) $394,400

Less: variable expense ($262,200 ÷ 6,900 × 6,800) -$258,400

Contribution margin $136,000

less: fixed cost - $103,500

Net operating income $32,500