Your Corporation's fixed monthly expenses are $18,500 and its contribution margin ratio is 62%. 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 $62,000? a) $38,440 b) $19,940 c) $5,060 d)$23,560

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
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Problem 1RE: Brandt Corporation had sales revenue of 500,000 for the current year. For the year, its cost of...
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 Your Corporation's fixed monthly expenses are $18,500 and its contribution margin ratio is 62%. 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 $62,000?

a) $38,440

b) $19,940

c) $5,060

d)$23,560

Expert Solution
Step 1 Introduction

Contribution margin is calculated as excess of sales price over variable expenses.

Net income is calculated as when sales revenue covers all the variable and fixed Expenses and earn more than the expenses covered.

 

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