Keomuangtai Corporation produces and sells a single product. The company has provided its contribution format income statement for October. If the company sells 4,200 units, its net operating income should be closest to:

Question

Keomuangtai Corporation produces and sells a single product. The company has provided its contribution format income statement for October.  If the company sells 4,200 units, its net operating income should be closest to:

Quizplus · Accepted Answer

Selling price per unit = $266,800 ÷ 4,600 units = $58 per unit
Variable expense per unit = $179,400 ÷ 4,600 units = $39 per unit
Unit CM = $58 per unit - $39 per unit = $19 per unit
Profit = Unit CM × Q - Fixed expenses
= $19 per unit × 4,200 units - $62,200 = $79,800 - $62,200 = $17,600

Keomuangtai Corporation Produces and Sells a Single Product