a company that produces and sells a single product, has provided its contribution format income statement for March. Sales (5,000 units) ... $205,000 Variable expenses ... 125,000 Contribution margin ... 80,000 Fixed expenses ... 62,400 Net operating income ... $17,600 If the company sells 10,000 units, its net operating income should be closest to:

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Business

Ella Gilmore

27 August, 22:16

a company that produces and sells a single product, has provided its contribution format income statement for March. Sales (5,000 units) ... $205,000 Variable expenses ... 125,000 Contribution margin ... 80,000 Fixed expenses ... 62,400 Net operating income ... $17,600 If the company sells 10,000 units, its net operating income should be closest to:

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William Christensen · Answer 1

Net operating income = $97,600

Explanation:

Giving the following information:

Contribution margin = 80,000

Fixed expenses = 62,400

First, we need to calculate the unitary contribution margin:

Unitary contribution margin = 80,000/5,000 = $16 per unit

Now, we can calculate the net income for 10,000 units

Total contribution margin = 10,000*16 = 160,000

Fixed expense = (62,400)

Net operating income = 97,600