Question

It costs​ Homer's Manufacturing to produce baseballs and Homer sells them for a piece. Homer pays a sales commission of​ 5% of sales revenue to his sales staff. Homer also pays a month rent for his factory and​ store, and also pays a month to his staff in addition to the commissions. Homer sold baseballs in June. If Homer prepares a contribution margin income statement for the month of​ June, what would be his operating​ income?

Answer 1

$105,075

Step-by-step explanation:

The computation of the operating income is shown below:

Sales (4 × 69,500) $278,000

Less:Variable costs (0.95 × 69,500 + 5% × 278,000) $79,925

Contribution margin $198,075

Less: fixed cost (13,000 + 80,000) $93,000

Net operating income $105,075

We simply deduct the variable cost and the fixed cost from the sales to arrive at the net operating income