Jilk Incorporated's contribution margin ratio is 58% and its fixed monthly expenses are $36,000. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $103,000?

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Quizplus · Accepted Answer

The net operating income can be estimated by first calculating the total contribution margin, which is sales multiplied by the contribution margin ratio (58% of $103,000 = $59,740). Then, subtract the fixed monthly expenses ($36,000) from the total contribution margin to get the net operating income ($59,740 - $36,000 = $23,740).

Jilk Incorporated's Contribution Margin Ratio Is 58% and Its Fixed