Question

Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. Sales (6,300 units) $ 415,800 Variable expenses 289,800 Contribution margin 126,000 Fixed expenses 103,500 Net operating income $ 22,500 If the company sells 6,200 units, its net operating income should be closest to: (Do not round intermediate calculations.) Brewer 8e Rechecks 2018-06-19 Multiple Choice $21,979 $20,500 $22,500 $18,000

Answer 1

Contribution Format Income Statement Particulars Sales Variable expense Contribution margin Fixed expenses Net operating income Amount($) 415800 289800 126000 103500 22500 Per unit cost ($) Working notes Particulars Sales Variable expense Contribution margin (415800/6300 ) fixed cost remains same no matter how much output a company produce. If company sells 6200 units its net operating income Contribution margin - Fixed cost =Net operating income Contribution Margin = 6200*20 Fixed cost Net operating income at sale of 6200 units $1,24,000 $1,03,500 $20,500