For Franklin, Inc., sales is $1,500,000, fixed expenses are $450,000, and the contribution margin ratio is 36%.What is net income?
A)$90,000
B)$162,000
C)$378,000
D)$540,000

Question

Quizplus · Accepted Answer

Net income is calculated by subtracting fixed expenses from the contribution margin. Contribution margin is sales multiplied by the contribution margin ratio: $1,500,000 * 36% = $540,000. Net income is $540,000 - $450,000 = $90,000.