Question

Sorin Inc., a company that produces and sells a single product, has provided its contribution format income statement for January. Sales (3,300 units) $ 128,700 Variable expenses 65,637 Contribution margin 63,063 Fixed expenses 47,900 Net operating income $ 15,163 If the company sells 3,700 units, its total contribution margin should be closest to: (Do not round intermediate calculations.)

Answer 1

Answer:

$70,707

Explanation:

Given that,

Sales (3,300 units) = $ 128,700

Variable expenses = $65,637

Contribution margin = $63,063

Fixed expenses = $47,900

Net operating income = $15,163

Contribution margin per unit:

= Sales revenue per unit - Variable cost per unit

= ($ 128,700 ÷ 3,300) - ($65,637 ÷ 3,300)

= $39 - $19.89

= $19.11

If the company sells 3,700 units,

Total contribution margin:

= Contribution margin per unit × Number of units sold

= $19.11 × 3,700 units

= $70,707