Answer:
Net Income = $18,000
Explanation:
MousePad Computer Company
Contribution Margin Income statement
Revenue (120 students × $450) = $54,000
Less: Variable expenses:
Student-related costs (120 students × $100) = $12,000
Administrative costs (120 students × $30) = $ 3,600
Total variable expenses <u> =($15,600)</u>
Contribution Margin $38,400
Less: Fixed cost
Instructors salary (3 × $1,800) = $ 5,400
Maintenance on building = $15,000
<u>Total fixed cost =$(20,400)</u>
Net Operating Income =$18,000
Note:
Students cost is a variable expense, because if we decrease the student's number, the revenue and expenses will decrease proportionately. Moreover, the company is getting profit from the students.
