Question

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

Sales (6,600 units) $429,000

Variable expenses 297,000

Contribution margin 132,000

Fixed expenses 103,500

Net operating income $28,500

Required:

a) If the company sells 6,500 units, its net operating income should be closest to __________.

Answer 1

$27,000

Step-by-step explanation:

Computation of the given data are as follows:

Net operating income = Contribution margin per unit × Reqd. Sales Unit - Fixed expenses

Where, Contribution margin per unit = Contribution margin ÷ Sales Unit

= $132,000 ÷ 6,600

= $20

So, by putting the value in the formula, we get

= $20 × 6,500 - $103,500

= $130,000 - $103,000

= $27,000