Question

Jilk Inc.'s contribution margin ratio is 62% and its fixed monthly expenses are $45,000. 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 $132,000?

Answer 1

Answer: $ 36,840.

Step-by-step explanation:

contribution margin=62% =0.62

fixed monthly expenses = $45,000

Sales =  $132,000

We assume that the fixed monthly expenses do not change.

Then, company's net operating income = (contribution margin×Sales )-fixed monthly expenses

=$( (0.62×132000)-45000 )

= $ (81840-45000)

= $ 36,840

Hence, the best estimate of the company's net operating income in a month when sales are $132,000 is $ 36,840.