Your Corporation's fixed monthly expenses are $18,500 and its contribution margin ratio is 62%. 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 $62,000? a) $38,440 b) $19,940 c) $5,060 d)$23,560

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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 Your Corporation's fixed monthly expenses are $18,500 and its contribution margin ratio is 62%. 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 $62,000?

a) $38,440

b) $19,940

c) $5,060

d)$23,560

Expert Solution
Step 1 Introduction

Contribution margin is calculated as excess of sales price over variable expenses.

Net income is calculated as when sales revenue covers all the variable and fixed Expenses and earn more than the expenses covered.

 

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