Decaprio Incorporated produces and sells a single product. The company has provided its contribution format income statement for June. If the company sells 9,200 units, its net operating income should be closest to:

Question

Decaprio Incorporated produces and sells a single product. The company has provided its contribution format income statement for June.  If the company sells 9,200 units, its net operating income should be closest to:

Quizplus · Accepted Answer

Using the contribution margin per unit, we can calculate the contribution margin for 9,200 units:

Contribution margin per unit = Sales price per unit - Variable cost per unit 
= $50 - $28 
= $22

Total contribution margin for 9,200 units = 9,200 units x $22 per unit = $202,400

We can then subtract the total fixed costs to find the net operating income:

Net operating income = Total contribution margin - Total fixed costs 
= $202,400 - $165,700 
= $36,700

Therefore, the closest answer choice is C) $36,700.

Decaprio Incorporated Produces and Sells a Single Product