Question

Creswell Corporation's fixed monthly expenses are $30,000 and its contribution margin ratio is 63%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $92,000?

a. $27,960.b. $62,000.c. $57,960.d. $4,040.

Answer 1

Net income= $27,960

Step-by-step explanation:

Giving the following information:

Fixed costs= $30,000

contribution margin ratio= 0.63

Sales= $92,000

First, we need to calculate the total contribution margin:

Total contribution margin= 92,000*0.63= 57,960

Now, the net income:

Net income= 57,960 - 30,000

Net income= $27,960