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28 April, 18:44

Green T-Shirt Processing has a unit sales price of $20 for their t-shirt. The contribution margin percentage is 70%. If they sold 7,000 shirts last quarter and fixed costs totaled $10,000, what is their net operating income?

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  1. 28 April, 21:45
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    Net operating income = 88,000

    Explanation:

    Giving the following information:

    Selling price = $20

    Unitary variable cost = 20*0.3 = 6

    Fixed costs = $10,000

    Units sold = 7,000

    We need to calculate the net operating income:

    Sales = 20*7,000 = 140,000

    Variable cost = 6*7,000 = (42,000)

    Contribution margin = 98,000

    Fixed costs = (10,000)

    Net operating income = 88,000
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