Noble Company produces only one product. Monthly fixed expenses are $12,000, monthly unit sales are 2,000, and the unit contribution margin is $10. How much is monthly net profit?
A) $20,000
B) $32,000
C) $0
D) $8,000

Question

Quizplus · Accepted Answer

Monthly total fixed expenses = $12,000
Monthly total variable expenses = 2,000 units x $10 per unit = $20,000
Total monthly expenses = $12,000 + $20,000 = $32,000
Total monthly revenue = 2,000 units x $10 contribution margin per unit = $20,000
Net profit = Total revenue - Total expenses = $20,000 - $32,000 = -$12,000
Since the net profit is negative, the best choice would be D, which indicates a monthly net loss of $8,000.

Noble Company Produces Only One Product