Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. If the company sells 5,300 units, its net operating income should be closest to:

Question

Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November.  If the company sells 5,300 units, its net operating income should be closest to:

Quizplus · Accepted Answer

Selling price per unit = Sales ÷ Quantity sold
= $319,200 ÷ 5,700 units = $56 per unit
Variable expenses per unit = Variable expenses ÷ Quantity sold
= $188,100 ÷ 5,700 units = $33 per unit
Unit CM = Selling price per unit - Variable expenses per unit
= $56 per unit - $33 per unit = $23 per unit
Profit = (Unit CM × Q) - Fixed expenses
= ($23 per unit × 5,300 units) - $106,500 = $121,900 - $106,500 = $15,400

Rovinsky Corporation, a Company That Produces and Sells a Single