Question

Bonita Industries’s cost of goods sold is $460000 variable and $260000 fixed. The company’s selling and administrative expenses are $340000 variable and $400000 fixed. If the company’s sales is $1700000, what is its net income?

Answer 1

$900,000

Step-by-step explanation:

I assume the question should be what is the Contribution margin? because the Formula for deriving Net Income is Contribution margin - Fixed costs which does not relate to the question above

Contribution Margin= Sales - Variable (Cost of Goods Sold) - Variable selling and administrative expenses

CM= $1700000 - $460000 - $340000

CM=$900,000

The contribution margin is $900,000