Grisham Corporation produces and sells a single product.The company has provided its contribution format income statement for February. If the company sells 5, 700 units, its net operating income should be closest to:

Question

Grisham Corporation produces and sells a single product.The company has provided its contribution format income statement for February.  If the company sells 5, 700 units, its net operating income should be closest to:

Quizplus · Accepted Answer

Selling price per unit = $358, 400 ÷ 5, 600 units = $64 per unit
Variable expense per unit = $229, 600 ÷ 5, 600 units = $41 per unit
Unit CM = $64 per unit - $41 per unit = $23 per unit
Profit = (Unit CM × Q)- Fixed expenses
= ($23 per unit × 5, 700 units)- $108, 400 = $131, 100 - $108, 400 = $22, 700

Grisham Corporation Produces and Sells a Single Product