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20 March, 05:04

Creswell Corporation's fixed monthly expenses are $25,000 and its contribution margin ratio is 67%. 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 $82,000? Multiple Choice $2,060 $54,940 $29,940 $57000

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Answers (2)
  1. 20 March, 07:35
    0
    Formula to be used is Contribution margin = Sales * Contribution margin ratio

    Contribution Margin = $82,000 * 67% = $82,000*0.67 = 54,940

    Net operating income = Contribution margin - Fixed expenses

    Net operating income = $54,940 - $25,000 = $29,940

    So the answer is option C
  2. 20 March, 07:52
    0
    The correct option is $29940 as shown in the workings below

    Explanation:

    Contribution margin = Sales * Contribution margin ratio

    Contribution margin=67%

    Sales=$82000

    Contribution margin=$82000*67%

    Contribution margin=$54940

    Net operating income=contribution - fixed costs

    where fixed costs is $25000

    Net operating margin=$54940-$25000

    Net operating margin=$29940

    Choosing $54940 is wrong because the requirement was not contribution margin
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Home » Business » Creswell Corporation's fixed monthly expenses are $25,000 and its contribution margin ratio is 67%. 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
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