Question

ovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. Sales (7,900 units) $ 426,600 Variable expenses 268,600 Contribution margin 158,000 Fixed expenses 103,500 Net operating income $ 54,500 If the company sells 7,800 units, its net operating income should be closest to: (Do not round intermediate calculations

Answer 1

$52,500

Step-by-step explanation:

The computation of the net operating income is shown below:

But before that we have to find out the contribution margin per unit which is shown below:

Contribution margin per unit is

= Contribution margin ÷ Number of sold units

= $158,000 ÷ 7,900 units

= $20

Now the operating income is

= Selling units × contribution margin per unit - fixed expenses

= $20 × 7,800 units - $103,500

= $156,000 - $103,500

= $52,500