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Lyrx [107]
3 years ago
11

Bolding Inc.'s contribution margin ratio is 61% and its fixed monthly expenses are $47,500. Assuming that the fixed monthly expe

nses do not change, what is the best estimate of the company's net operating income in a month when sales are $137,000?a. $83,570b. $5,930c. $36,070d. $89,500
Business
1 answer:
Natali5045456 [20]3 years ago
3 0

Answer:

c. $36,070

Explanation:

contribution margin ratio is the ratio of the contribution to sales of an entity for a given period.

contribution margin ratio= contribution/sales

where contribution is the difference between sales and the variable cost

Given;

sales = $137,000

contribution margin ratio = 61% = 0.61

0.61 = contribution/$137,000

contribution = $137,000 × 0.61

= $83,570

Net operating income is the difference between the contribution and the fixed cost.

Fixed cost = $47,500

Net operating income = $83,570 - $47,500

= $36,070

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Cash flow to shareholders = Dividends paid + Increase in common stock + Increase in additional paid-in surplus account

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Operating cash flow =  Cash flow from Assets + Change in net working capital + net capital spending

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Suppose a worker is offered a wage of $8 per hour, plus a fixed payment of $100 per day, and she can use 24 hours per day. The Market rate of substituion between leisure & income is $8 per day.

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A certain organization trying to decide where to locate their future factory is considering three locations. They are taking int
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