Question

a company that produces and sells a single product, has provided its contribution format income statement for March. Sales (5,000 units)......... $205,000 Variable expenses......... 125,000 Contribution margin..... 80,000 Fixed expenses......... 62,400 Net operating income...... $17,600 If the company sells 10,000 units, its net operating income should be closest to:

Answer 1

Net operating income= $97,600

Step-by-step explanation:

Giving the following information:

Contribution margin= 80,000

Fixed expenses= 62,400

First, we need to calculate the unitary contribution margin:

Unitary contribution margin= 80,000/5,000= $16 per unit

Now, we can calculate the net income for 10,000 units

Total contribution margin= 10,000*16= 160,000

Fixed expense= (62,400)

Net operating income= 97,600