Question

Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. Sales (5,700 units) $ 319,200 Variable expenses 188,100 Contribution margin 131,100 Fixed expenses 106,500 Net operating income $ 24,600 If the company sells 5,300 units, its net operating income should be closest to_____________.
a. $24,600
b. $2,200
c. $22,874
d. $15,400

Answer 1

Answer:

d. $15,400

Explanation:

Sales (5,300 units)        $296,800

Variable expenses        ($174,900)

Contribution margin      $121,900

Fixed expenses             ($106,500)

Net operating income   $15,400

Workings:

Sale Price per unit = $319,200 / 5,700 = $56

Variable cost per unit = $188,100 / 5,700 = $33

Total Sales = 5,300 x $56 = $296,800

Total Variable cost = 5,300 x $33 = $174,900