Question

Decaprio Inc. produces and sells a single product. The company has provided its contribution format income statement for June.

Sales (5,500 units) $ 192,500
Variable expenses 82,500
Contribution margin 110,000
Fixed expenses 86,500
Net operating income $ 23,500
If the company sells 5,700 units, its net operating income should be closest to:__________

Answer 1

Net income= $27,500

Step-by-step explanation:

Giving the following information:

Sales (5,500 units) $ 192,500

Variable expenses 82,500

Contribution margin 110,000

Fixed expenses 86,500

First, we need to calculate the unitary contribution margin:

unitary contribution margin= 110,000/5,500= $20

Now, the net operating income for 5,700 units:

Net income= 5,700*20 - 86,500

Net income= $27,500