Question

Creswell Corporation's fixed monthly expenses are $24,500 and its contribution margin ratio is 66%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $81,000

Answer 1

$28,960

Step-by-step explanation:

The computation of the best estimate of the company's net operating income is presented below:

We know that

Net operating income =Contribution margin - fixed monthly expenses

where,

Sales = $81,000

And, the contribution margin equal to

= Sales × Contribution Margin Ratio

= $81,000 × 66%

= $53,460

So, the net operating income

= $53,460 - $24,500

= $28,960